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According to a press release by the Washington State Gambling Commission, Valve is to “immediately stop allowing the transfer of virtual weapons known as ‘skins’ for gambling activities through the company’s Steam Platform.”

The release, posted by Esports Betting Report, details how the Commission contacted Valve as early as February 2016 to find out more about how the Seattle-based company is handling the numerous companies and users betting in an unregulated environment through Steam, primarily in weapons skins for Counter-Strike: Global Initiative. The Commission’s stance appears to place quite a bit of blame at Valve’s feet.

“Since February 2016, “skins” continue to be used as consideration for illegal gambling activities on third party websites. “Skins” transactions are usually facilitated within Valve Corporation’s Steam Platform. All third party gambling sites have Steam accounts and use the Steam platform to conduct their gambling transactions.”

The release also mentions the recent revelation that esports betting has handled over $1 billion so far this year.

Accordingly, the Commission is directing Valve to take “whatever actions necessary” to stop third-party websites from using Steam to gamble with weapon skins. The statement explicitly requests for all gambling-related Steam accounts to be shut down, including “bot” accounts.

The release includes a statement from the Washington State Gambling Commissioner, Chris Stearns:

“In Washington, and everywhere else in the United States, skins betting on esports remains a large, unregulated black market for gambling. And that carries great risk for the players who remain wholly unprotected in an unregulated environment. We are also required to pay attention to and investigate the risk of underage gambling which is especially heightened in the esports world. It is our sincere hope that Valve will not only comply but also take proactive steps to work with the Commission on future measures that will benefit the public and protect consumers.”

However, such a feat isn’t so simple. Valve has already issued multiple shutdown notices to many gambling operators, but more have sprung up in their place. Last week, for example, CS:GO Lounge relaunched featuring betting with virtual currency—which could very well still violate this order. And because Valve only has until October 14 to comply with the order, more strict actions could soon be taken, up to and including halting all skin transactions until Valve can get the situation under control.

And if Valve doesn’t comply to the state’s gambling laws, the Commission is perfectly within its rights to pursue additional charges against the company, including criminal charges. It also bears mentioning that the company is facing a class-action lawsuit regarding the same problem—lack of oversight to third-party gambling operation.

How Valve and the Washington State Gambling Commission settle this matter will very likely pave the way for regulations on how game developers handle weapon skin trading—and may also create a legal, regulated environment in which esports betting could operate.

Correction: The class-action lawsuit against Valve has been rejected by the federal court system. More on that later.

Update: Will Green, ESBR’s journalist who posted the original story, has tweeted out a copy of the letter sent to Valve by WSGC. Included in the letter are possible actions that WSGC could take—”seizure and forfeiture of any property related to illegal gambling  activities; forfeiture of Valve Corporation’s corporate charter; and possible criminal charges against employees.”