Yes, indeed. Well, you are able to give away games that were given away for free. The system will tell you that a game has been free by putting two little red stars next to the game's name in the dropdown list when attempting to create a givaway. However, these games do not contribute to your contributor level (aka CV aka your level on this site).
Edit: Oppenh4imer above has already linked the FAQ in his comment. Might be a good idea to give them a thorough read. And while you're at it, you might wanna check out the Guidelines as well ;)
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You make the giveaway, add the winner as a friend of Steam and then buy him/her the game as a gift.
Or you buy keys and gift those.
Do be careful about the price difference, more than 10% or so can't be gifted, not fully sure how it is but in case of doubt many it restricted to only your country.
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Yes, that's it. That is, if we are talking about keys; if you prefer to gift via Steam, you'll have to buy a gift afterwards directly for a winner (just be sure to check proper regional restrictions: you won't be able to gift to a region where a said game is 10%+ cheaper than in yours). Basically, if you activate a key, it's forever tied to your account, and the only way to gift it would be gifting the whole account, which would be weird, to say the least.
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Yes, basically.
You can buy keys or gift directly via Steam, then what Maruten said comes into play, you have to consider regional price differences. Steam does not allow to gift to a region with a price difference bigger than 10%.
Anyways, when you buy keys you also have to take region restrictions into account.
But yeah, you buy it, then come here and create a giveaway with it. That's how it works.
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So I have plenty of games that I have in my steam library already redeemed that I don't want anymore. Can I still give out that steam key? Or is worthless since the key is already redeemed and the product was activated?
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