New York State Sues Valve Over "Addictive, Harmful, and Illegal" Gambling Features
New York state's attorney general, Letitia James, claims Valve "enables gambling," which is "addictive, harmful, and illegal" through its multiplayer games.
Counter-Strike 2
Today, the State of New York filed a lawsuit against Valve Corporation alleging that loot-box systems in its games, such as Counter-Strike 2, Team Fortress 2, and Dota 2, amount to illegal gambling under New York law. The complaint, brought by Attorney General Letitia James, claims Valve “promotes gambling for profit” and harms children by exposing them to addictive mechanics traditionally associated with real-money wagering.
She also went to Twitter with the topic:
In games, Valve (and other companies) lets players spend real money on randomized rewards resembling a slot machine’s risk/reward loop. Valve generated billions, according to the court document, by selling “keys” to unlock these boxes and then allowing players to trade or resell won items on the Steam Marketplace, effectively connecting the virtual economy to real-world value.
The argument is that these rare items, whose perceived value can be monetized or resold, convert these mechanics into gambling under state law, which is intended to be tightly regulated or prohibited. The lawsuit seeks restitution for players, tripled fines on alleged illegal gains, and a permanent injunction against loot-box promotion.
Importantly, the legal argument seems to hinge on the transferability of value and real-money marketplaces.
This Counter-Strike skin reportedly sold for more than $1 million in 2024.
"Illegal gambling can be harmful and lead to serious addiction problems, especially for our young people,” said Attorney General James. “Valve has made billions of dollars by letting children and adults alike illegally gamble for the chance to win valuable virtual prizes. These features are addictive, harmful, and illegal, and my office is suing to stop Valve’s illegal conduct and protect New Yorkers."
Courts in the U.S. have previously rejected claims that loot boxes are illegal gambling, for example, in cases involving Valve and other developers, so it remains to be seen how this latest filing will shake out.
Other territories have ruled differently in the past, such as the EU placing regulations on things like EA's sports games. And in Brazil, loot boxes are banned entirely for anyone under the age of 18.
The difference maker here could be the way the lawsuit frames the mechanic itself, not just vague references to general game design. This could also be what sets the mechanics apart from something like collectible card game booster packs, such as Pokémon.
DOTA 2 Loot Box
Loot boxes and gacha loops have long been defended as microtransaction mechanics, not gambling. But regulators are increasingly looking at transferability and perceived value as points of contention. So, if virtual items can be resold or traded for cash or cash-equivalent value (even indirectly), authorities may classify the mechanic as a form of wagering activity.
You can read the actual court filing right here. This could end up being a major flashpoint for many developers and companies, not just Valve.
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