Valve Cracks Down on Online Gambling, Bloomberg TV's Novy-Williams Reports

The third-party marketplace of virtual item gambling is under siege from Valve after the video game company received heat from a lawsuit and several scandals.
By Michael Sheetz ,

NEW YORK (TheStreet) -- Valve, the Bellevue, WA-based video game developer and distributor, is cracking down on third-party gambling websites.

Expected to generate more than $7.4 billion in worth in 2016, Bloomberg's Eben Novy-Williams thinks these unregulated gambling marketplaces are the slimy underbelly of the e-sports world.

"When you considered that a lot of the people who use these websites are teenagers, which obviously does not play well publicly and ... there have been a few high profile scandals in the skins gambling world in the past couple of weeks," Novy-Williams said on Bloomberg TV's "Bloomberg Markets."

Valve sells in-game items called "skins," which are aesthetical changes to virtual weapons and tools that players can purchase. These skins have real cash value on third part marketplaces and led to the creation of a massive underground gambling world in e-sports.

Two notable scandals occurred within the past few weeks. The first was when one of the websites admitted "that it had fabricated or fixed the results of some of its games to make the game appear more enticing to potential users," Novy-Williams said, and the second was due to several prominent YouTube stars failing "to disclose that they were owners of these gambling websites, as they were pushing their subscribers towards those sites."

"I'm sure that within the Valve business structure they said, 'you know it's about time, this sport has grown, the game is very popular, we don't need this,'" Novy-Williams noted.

Additionally, Valve is a defendant in a lawsuit that accuses the video game company of violating gambling laws, Novy-Williams added.

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