The CS:GO skin gambling controversy that kicked off in June seemed to come to a head a couple of weeks ago when Valve issued a cease-and-desist letter to more than 20 gambling sites, including CSGO Lounge, one of the first and biggest websites in the questionably legal industry that grew around Valve's game. It was a fairly straightforward proposition: Commercial use of Steam accounts is “unlicensed and in violation of the SSA [Steam Subscriber Agreement],” Valve wrote, and could lead to penalties of various sorts, including the loss of the account outright.

The general expectation was that gambling sites would be forced to shut down, although once such site, CSGOBig, said the closure was only temporary and vowed to return. But CSGO Lounge has taken a different tack by embracing its gambling heritage, even as it denied that it was ever actually a gambling site at all.

“From the very beginning, the lounge service was intended as an entertainment service for the esports community of Dota2 and CS:GO, and we have never considered it as a real money betting. Virtual items in CS:GO and Dota2 have no monetary value and any community interaction with the virtual items is meant only for entertainment, without any profit interest,” a recently-posted notice explains. “We did not collect any commission or similar until June 2016, where we started doing it in order to improve our items drafting and quality of winnings, compensate items losses due to issues related to our product or issues with Steam community trading, to enable giveaways for the community and add more features to our service in near future.”

“After all the recent events around virtual items and the official letter by Valve, which we have received as well, we were left out alone without any additional information or communication by Valve on this matter. We had to make a decision on how to proceed with Lounges as community place and entertainment service. The situation is highly confusing—we are not offering games of luck, we are not offering any transactions with real money or equivalents. Despite those facts, in order to avoid or reduce the confusion, we have decided to acquire a license to legally operate in most of the countries and be able to accept the esports bets by our community, as if it would be real money,” it says.

Gambling laws differ significantly across the world and even within individual countries, and essentially Lounge is only now making an attempt to implement systems that comply with them. As Evan explained in his breakdown of the CSGO skin gambling scene, Lounge itself has been operating for about three years without any meaningful checks against a user's age or location. To me, Lounge's rapid move to implement these systems is a tacit admission of wrongdoing.

“Starting from Monday, 1st August 2016, we will start limiting the access to the betting functionality for users visiting us from countries and regions, where online esports betting is forbidden. We will add additional registration and verification process and we require you to comply with our new Terms of Service if you want to keep using our service. We also remind that our service is only for users who are at least 18 years old,” it continues. “We will be operating according to the new terms and any transactions related to the items betting functionality will be handled accordingly to the new terms of service, and only on the territories, which do not forbid it by law.”

The betting feature will be disabled in the following countries and regions, although users will still be able to withdraw any existing winnings and deposits:

• United Kingdom
• United States
• Belgium
• France
• French Guiana
• Guernsey
• Gibraltar
• Ireland
• Isle of Man
• Jersey
• Martinique
• French Polynesia
• Reunion
• Mayotte
• Turkey
• Spain
• Scotland
• Israel

The ban on betting from the US, UK, and parts of Europe in particular should severely impact the number of CS:GO items that are bet on the site. CSGO Lounge said it is trying to come up with ways for people in those regions to “stay engaged” with its site, although it also warned that it can't guarantee the safety or sanctity of items on the site if and when Valve decides to drop the hammer.

That's the big question mark hanging over this whole thing. CSGO Lounge appears to be making moves toward legitimacy, but Valve's C&D specifically cites the unlicensed commercial use of Steam as the problem here—not that these are gambling sites, but that “Steam and Steam services are licensed for personal, non-commercial use only.” Even if the Lounge gets squared away as a proper, up-front gambling site, in other words, if it's still making use of Steam, it will presumably still be in violation of the SSA. Theoretically, it could disentangle itself from Steam and operate independently, but given how tightly integrated it, that seems unlikely—or at the very least, unlikely to succeed.

I've reached out to both Valve and CSGO Lounge for comment.