Bling

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.