New York Attorney General Letitia James has filed a lawsuit against Valve Corporation, accusing the game developer of operating illegal gambling schemes through the “loot box” systems in Counter-Strike 2, Team Fortress 2, and Dota 2.
The complaint alleges that Valve’s design and monetization of virtual item drops violate New York’s constitutional and criminal prohibitions on gambling, particularly by enabling users, including minors, to wager money for the chance to win valuable digital items.
The lawsuit argues that Valve’s loot box mechanics meet the legal definition of gambling under New York Penal Law § 225.00(2), which defines gambling as occurring when a person stakes something of value on a game of chance with the understanding that they may receive something of value depending on the outcome. According to the complaint, Valve’s system fits squarely within that definition by charging players approximately $2.49 (plus tax) for a key to open a virtual “case” or “treasure,” which then awards a randomly selected cosmetic item.
In Counter-Strike 2, players receive free “weapon cases” through gameplay but must purchase a key from Valve to open them. When opened, a slot machine-style animation plays, showing a spinning carousel of potential rewards before landing on one item. The complaint highlights that the animation includes a “near miss” effect, where high-value items appear just before or after the awarded item, mirroring techniques used in traditional casino slot machines.
Although the awarded items, commonly known as “skins,” offer no gameplay advantage, their market value can be substantial. Valve categorizes skins into rarity tiers, including “Exceedingly Rare Special Items,” which have disclosed odds as low as 0.26%. The rarity system, combined with visible color-coding and tier labeling, allegedly fuels speculative demand.
The complaint underscores that these items are not merely cosmetic novelties. Valve operates the Steam Community Market, where users can resell skins and other virtual items. Valve takes a 15% commission on each transaction. Proceeds are credited to a user’s Steam Wallet, which can be used to purchase games or hardware. The lawsuit details how an investigator converted a virtual knife skin into $180 in cash by selling it for wallet funds, purchasing a Steam Deck, and reselling the hardware offline.
Beyond Steam, the complaint alleges that Valve knowingly facilitates third-party marketplaces by providing each user with a “Trade URL” that enables the transfer of items to external sites. These marketplaces allow users to cash out skins directly for fiat currency, with some rare Counter-Strike skins reportedly selling for hundreds of thousands of dollars.
The complaint also emphasizes risks to minors, noting that Valve’s franchises attract hundreds of millions of players and are deeply embedded in esports and streaming culture. The Attorney General contends that introducing children to gambling-like systems increases their likelihood of developing gambling problems later in life.
James is seeking a permanent injunction barring Valve from continuing to offer the alleged gambling features in New York, as well as disgorgement of profits and civil penalties.
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