market for skin gambling looks set to contract, with game developer Valve moving to cut off access to the Steam marketplace for gambling sites and major streaming website Twitch banning broadcasts showing the activity.

Skin betting relates to the wagering of decorated weapon designs, in a similar manner to how one wagers casino chips, on a variety of games, including the outcome of eSports matches and on more traditional casino games like roulette.

Skin gambling has expanded dramatically in the last three years, especially in skins attached to the game Counterstrike: Global Offensive (CS:GO).

According to Bloomberg, the skin gambling market was anticipated to take $7.4bn in bets this year, but it could dramatically shrink in the wake of this week’s statement from Valve.

Erik Johnson, a spokesman for Valve, said: “These sites have basically pieced together their operations in a two-part fashion.

“First, they are using the OpenID API as a way for users to prove ownership of their Steam accounts and items.

“Any other information they obtain about a user’s Steam account is either manually disclosed by the user or obtained from the user’s Steam Community profile (when the user has chosen to make their profile public).

“Second, they create automated Steam accounts that make the same calls as individual steam users.

“Using the OpenID API and making the same web calls as Steam users to run a gambling business is not allowed by our API nor our user agreements.

“We are going to start sending notices to these sites requesting they cease operations through Steam, and further pursue the matter as necessary.”

Johnson also stressed that Valve does not have a business relationship with any CS:GO gambling sites, and has never directly received revenue from them.

The move will come as a hammer blow to skin gambling sites, with the Steam API crucial to facilitating the majority of the games such sites offer.

Valve was faced last month with a class action lawsuit alleging its complicity in allowing an illegal gambling market to spring up around CS:GO skin betting.

Streaming site Twitch has also moved to prevent broadcasters from showing third party CS:GO gambling sites.

A statement on the streaming service's website reads: “Content in which the broadcaster uses or promotes services that violate Valve’s stated restrictions is prohibited on Twitch.”