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New York Sues Valve Over Gambling-Like Loot Boxes
The New York Attorney General is taking Valve to the courts, suing the famed American video game developer for its controversial loot boxes in Counter-Strike, claiming they promote illegal gambling. This is not the first time Valve Corporation has found itself facing lawsuits, but this suit has the potential to really sting them. Because the state is pushing to define these loot boxes as an illegal gambling device, and if they succeed, it could put one of the most core aspects of the game into question.
Should New York determine loot boxes to be illegal and shut them out, it would only be a matter of time before other states catch on, and perhaps reinvigorate the broader international circles. Especially European regulators, where small-scale rulings against loot boxes have been brought up, but none have really stuck, and none are as big or as ambitious as what New York is planning. This could bring about the beginning of the end for loot boxes. However, this is not an open and shut case. We won’t see loot boxes disappear from popular games such as Counter-Strike 2, Team Fortress 2, and Dota 2. There are many ways this scenario can unfold.
New York Case Against Valve
The Attorney General’s office released a public statement on the 25th of February stating it will sue the game developer for promoting illegal gambling. The charge being that these loot boxes have slot machine-like elements, and that the rewards they bring can be sold at secondary markets for real money. New York Attorney General Letitia James had launched an investigation into Valve’s popular video games, including Dota 2 and Counter-Strike 2, focusing on the impact and procedures behind loot boxes.
These items were found to induce similar emotional triggers and compelling mechanisms to slot machines and casino games. They reinforce risk taking, and spending money in the hopes of winning something rare and valuable, which can be sold later.
In the statement, they claimed that Valve had made billions of dollars luring its users, most of whom are either teenagers or younger, and that their mechanics are just like gambling games. Games that, in the state of New York, are still illegal on online platforms. While there have been efforts to legalize online casinos in New York, none have come to fruition just yet, though there are proposals introduced by Senator Joseph Addabbo Jr, which currently sit on the table. But even if these were, and New York legalized online casinos, it would not give Valve permission to run these loot boxes.
Defining the Loot Boxes
Loot boxes are objects that you can buy in a game, but they are not necessary to play the game. They are effectively mystery boxes, which contain an accessory or item that has some kind of worth in the game. In CS2 loot boxes, you can get rare skins, knives, gloves, weapon skins, stickers, patches, and weapon finishes. These are all purely cosmetic and do not change the weapon or the player’s capabilities within the game. The same goes for Treasures in Dota 2. These loot boxes can contain hero sets, weapon skins, and special items with custom visual effects.
The items in question have a kind of rarity, ranging from common to the ultra rare. Though they don’t actually have a monetary worth, you cannot buy and trade these within the games. However, in the Steam Community Market, Valve’s very own virtual marketplace, you can connect with other users and exchange these items. The items can be exchanged in like-for-like swaps, or, they can be sold directly for cash. Therein lies the breach, and the mechanic that can be interpreted as a means to gamble.
Thinking of it as a slot machine, you would be going through the following process:
- Buy a loot box
- Open the box and get a mystery item
- Head to the Community Market
- Sell the goods to other players
A complete outsider may not see the harm in trading these collectibles; after all, are they much different from selling baseball cards? Well, the problem here is the accessibility and scale.
Vendoring and Illicit Trading
During the investigation by the Attorney General’s Office, they found that one item sold for over $1 million. They also estimated the market for Counter-Strike skins had surpassed $4.3 billion in March 2025. The problem is that the Valve services had made it easier for users to liquidate their items through the marketplace, and the high perceived value of the items made it a target for gamblers.
Plus, this was found to have impacts on the children playing the game. In their statement, the Office claimed that children who are introduced to gambling (indicating the loot boxes as a form of this), are four times more likely to develop a gambling problem later in life.
By promoting these items, and setting increasingly rarer goods, they are driving up the value of the collectibles. Also, the marketplaces encourage the selling of goods. Children who access these markets can tie the two together, looking to gamble by buying loot boxes and trying to turn their rewards into real cash.
Valve’s Skin Betting Related Lawsuit
This is not the first time Valve has been tangled in legal disputes. The other major case came back in 2016, when Valve was sued for its association with third-party skin gambling sites. These sites used the skins in Counter-Strike Global Offensive as a means of currency, whereby players could deposit their skins and bet on game outcomes using these skins as collateral. The skins could also function as casino gaming chips. Valve had allowed these sites to connect to user Steam accounts, where they could use their inventory to fund gambling games or bets.
Counter-Strike skins and weapon patches are not legal tender, not in any country. The sites that accepted these were all black market sites that assigned real money value to the skins, turning them into valuable assets that could be gambled. Thus, the sites did not have the same ID verification or KYC protocols as licensed sites. Many were found to accept teenage and minor gambling, from using skins to play casino ames to trading them for real money. Valve cracked down on these third-party betting sites, and by 2022, the majority of the lawsuits had disappeared.
Are Loot Boxes Gamified Gambling Devices
Loot boxes are a controversial topic that has been held for years now, and there are arguments to be had for both sides. Critics would argue that they mirror the rewards structure that slot machines create. Rarity creates an artificial scarcity of the items you can win, and while they have no real monetary value, you can exchange them on marketplaces. Some of these collectibles can go for massive sums of money, far exceeding what you may win by hitting the max payout at an online slot machine. Also, platforms like Valve, seem to encourage the trading and selling of these items in their marketplaces, creating the opportunity for collectors to actually make money off any rare items they win through loot boxes.
However, the supporters of the system would argue that it is a pretty far stretch. The same could be said about baseball cards, Pokémon card booster packs, mystery Funko Pop boxes, FIFA card packs, and even blind comic book bundles or mystery sneaker boxes. None of these inherently promotes gambling. Sure, the marketplace makes it easier and more convenient for Counter-Strike and Dota players to exchange their won goods, but there are no rules forcing players to participate. These, Random Monetization Mechanics, are used in many applications. If the law is redrawn to classify these as gambling, there will be many secondary arguments attacking other uses of these types of products.
And even if the loot boxes are defined as gambling, it does not necessarily mean they will disappear entirely.
What to Expect Going Forward
A definition for what constitutes online gambling must be accurately described by the lawmakers. Should all loot boxes be labeled as potential gambling devices, the response may be to:
- Add age limits to loot boxes
- Create mandatory probability disclosures
- Curb the potential value/sellability of these items
- Enforce stricter caps and oversight on the marketplaces
- Restricting the states/regions loot boxes are available in
Though this is a core part of the Valve ecosystem, and the games developer will not go down without a fight. The 2016 lawsuits came to an end with Valve stepping up its part in battling the skin-betting gambling sites. While this is something that is more internal, and essential to the Valve ecosystem, they may find ways to come to a compromise with the New York attorneys. It may involve limiting the marketplace itself or tweaking the loot boxes to make them less like slots. Either way, this is an important milestone on the contentious subject of loot boxes.
They have been targeted by many groups for their controversial products, and now a state authority has come in to act. Any big legislative changes in New York would definitely wake up other authorities, and could have a potential domino effect. This is the worst case scenario for Valve, which will look for an alternative way to meet the needs of the regulators, but without sacrificing one of the most profitable and distinguishing features in its games.
