Bloomberg Businessweek (North America) - - Politics / Policy -

is revered in the video game in­dus­try. It makes a hand­ful of pop­u­lar games, in­clud­ing the De­fense of the An­cients (Dota) se­ries, and runs Steam, an on­line mar­ket­place that’s to PC gam­ing what Ap­ple’s App Store is to smart­phone apps. The pri­vate com­pany doesn’t re­lease its sales, but re­searcher Privco es­ti­mates it made a profit of $325 mil­lion in 2013 on $1.6 bil­lion in rev­enue.

At Valve’s 2014 devel­op­ers’ con­fer­ence, em­ployee Kyle Davis said the com­pany had de­ter­mined the best way to get play­ers deeply en­gaged was to give away vir­tual items of ran­dom value and en­cour­age ex­changes. “This is not an ac­ci­dent. This is by de­sign,” Davis said. “We see more blogs pop­ping up and more and more e-mails from our play­ers say­ing, ‘I’m not re­ally sure what hap­pened, but I’ve been play­ing Dota for the last week or two, and I made $100 sell­ing th­ese items that I got.’ This is hugely suc­cess­ful for us.” He de­clined to com­ment for this story.

On the gam­bling sites, users with names such as Bul­let­point and Ravenouski­lljoy stake skins on pro matches. A typ­i­cal match draws about $134,000 in skins wa­gers on CSGO Lounge, ac­cord­ing to Sportim; a March con­test be­tween teams Lu­mi­nos­ity and Fnatic drew al­most $1.2 mil­lion. There are also ways to

it will be a sad day for the peo­ple who op­er­ate th­ese sites,” says Bryce Blum, gen­eral coun­sel for Unikrn, an e-sports gam­bling com­pany in Seat­tle that’s li­censed to op­er­ate some­what like a tra­di­tional sports bet­ting busi­ness and bars U. S. bet­tors.

In a hand­ful of court cases in­volv­ing vir­tual goods in video games, judges have ruled that bets with those items shouldn’t be con­sid­ered gam­bling. “Even in the In­ter­net world, there is a cru­cial dis­tinc­tion be­tween that which is pre­tend and that which is real and true,” U.S. District Court Judge James Bredar wrote in Oc­to­ber, dis­miss­ing a suit against mo­bile gam­ing com­pany Ma­chine Zone. “The laws of Cal­i­for­nia and Mary­land do not tri­fle with play money.” But un­like the gam­ing com­pa­nies that have suc­cess­fully de­fended them­selves in court, Valve’s soft­ware en­ables an ex­plicit con­nec­tion be­tween in-game goods and off­line cash.

Ryan Mor­ri­son is a lawyer in New York who spe­cial­izes in is­sues re­lated to video games. Over the past four months, he says, he’s re­ceived more than two dozen in­quiries from peo­ple who want to sue Valve af­ter los­ing money gam­bling on skins. Many are un­der­age, and the big­gest losses ex­tend into the thou­sands of dol­lars. None would agree to speak to a re­porter. “Valve acts as if they’re a 10-per­son in­die com­pany,” he says. “I am shocked that they let this go on.” �Joshua Brustein and Eben Novy-wil­liams

The bot­tom line As broad­cast­ers pre­pare to take CS:GO main­stream, they may have to con­front its strug­gles with il­le­gal gam­bling sites.

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