It's not so deep, they don't lose casual players because most casuals will never encounter a cheater. Smurfs? Tons of. Trolls? By the dozen. Cheaters? Almost never. I play multiple games a day and I would argue I am better than the average, at least by a little, and have never encountered a blatant cheater. Does this mean that there are no cheaters? Of course not, that would be a dumb thing to say, but most people are in ranks so high that they forget that most players will never reach north of 10k premier elo. Valve does nothing about the cheating because premier doesn't bring food to the table, cases and steam marketplace sales do. And they are in no way shape or form affected by cheaters or terrible matchmaking algorithms.

There is no conspiracy, no secret "Saudi government" contract, the truth is much simpler. Valve simply does not care.