Did Valve Just Kill the Steam Item Economy?

Maybe not. But the announcement sends ripples through the trading community.

Valve’s update on the current situation regarding in game Steam items shook up the virtual economy yesterday. What they basically announced was that they’ll be sending cease and desist letters to any gambling site found using Valve’s OpenID API to engage in gambling of skins.

This announcement comes in light of a recent class-action lawsuit against Valve that claims they have played a major role in aiding children to gamble away online skins using various gambling sites (CSGOinsertnamehere.com). Along with making it easy for underage players to trade and gamble skins, the suit claims that by keeping the system open to children as well as building an economy of ingame items with real-world value, Valve is making it easy for children to fall prey to gambling.

We’d like to clarify that we have no business relationships with any of these sites. We have never received any revenue from them. And Steam does not have a system for turning in-game items into real world currency.
-Erik Johnson from Valve’s Official Statement

“So I just found this cool new website…”

The announcement was two-fold. The lawsuit definitely spurred up some Valve lawyers out of the woodwork, who unlike the rest of the company presumably do not work on whatever project they want. But this whole situation reached the public eye when h3h3productions’ Ethan Klein made a video highlighting the ignominious tactics used by Youtubers “tmartn” and “ProSydicate”. Ethan brought light to the fact that both of them were actually owners of a gambling site called CSGOLotto, and while making videos online showing them winning large amounts of money on CSGOLotto, they intentionally did not disclose that they were part owners of the company. Watch the video that explains it all.

These recent events definitely shook up Valve’s multi-billion dollar online item economy. The h3h3 video reached the front page of reddit in 3 different subreddits in 4 hours, and tmartn’s ‘famous last words’ almost became a meme. Actually, it definitely became a meme.

The CS:GO Community’s Reaction

So Valve’s announcement on its tightening grip on the item economy and the CSGO economy in particular has been accepted and met with mostly positive reactions.

What this means for the largest skins sites like OPskins and CSGOLounge who don’t actively engage in gambling, but use Valve’s API to create an array of bots to handle secondary trades for trading and betting, no one is quite sure. It doesn’t seem like Valve will target betting sites in the same way it’ll target pure gambling sites.

Of course, there are those who aren’t sure that Valve is making the right move. After all, the statement reads like it’s written by lawyers who just want to absolve themselves and their company of any wrongdoing.

What does this mean for item trading and betting?

This move by Valve doesn’t indicate anything in particular beyond the fact that they can basically go after any third party site right now and tell them to cease operations. Which sites will they target? We don’t really know, and that’s a typically Valve-esque decision that they’ll make behind closed doors. Still, Valve is probably not going to stop simple betting and trading sites like CSGOLounge and Dota2Lounge, even though the second part of their statement that deals with using bots with Valve’s API is against their TOS.

It wouldn’t be in Valve’s best interests to tank the prices of items and kill the economy completely. There is a not insignificant amount of players who rely on Valve’s ecosystem of item drops, opening cases, trading and betting, and this keeps the flux of the economy relatively balanced for most games. Having all these players leave might just reduce the demand of many of these items, causing prices to fall and in turn leading to Valve earning less revenue through the Community Market. You can already see item prices falling due to uncertainty, but at this rate they will be back up eventually, unless Valve decides to shut  down any of the bigger trading sites. From here on the decision is entirely Valve’s.

Written by Upamanyu Acharya

I founded Fynestuff. I play games, write tech articles and look towards putting Buzzfeed out of business someday. Let's talk about crypto: upamanyu@fynestuff.com

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