New York Attorney General Sues Valve Over Alleged Illegal Loot Box Gambling

A new lawsuit from Letitia James accuses Valve Corporation of operating unlawful gambling systems inside several of its most popular video games. The case follows an investigation by the Office of the Attorney General, which concluded that Valve’s loot box mechanics in Counter-Strike 2, Team Fortress 2, and Dota 2 require players to pay for the possibility of receiving scarce virtual items that carry real-world value.

Valve, which develops and publishes video games, also runs Steam, its online distribution service where users download titles and trade digital goods. In certain games, players buy keys priced at $2.49 plus tax to unlock virtual cases referred to as loot boxes. Once opened, the case delivers a randomly assigned cosmetic reward — for example, a decorative weapon skin or a character accessory. The probabilities governing these rewards are determined by Valve.

In Counter-Strike 2, opening a case triggers an animated wheel that spins before stopping on a selected item. The complaint compares this visual sequence to a slot machine. Although the items provide no gameplay advantage, they can be resold online. One digital item has reportedly been sold for more than $1 million. Valve structures the system so that certain rewards are far more difficult to obtain, which increases scarcity and resale prices. Many purchasers receive items valued below the $2.49 spent on a key.

According to the filing, this model has generated billions of dollars for the company. It states that tens of millions of dollars were collected from thousands of New York residents through loot box key sales, with millions more obtained in commissions from New Yorkers reselling items acquired through those boxes.

Players may exchange these items in two primary ways. On the Steam Community Market, proceeds from sales can be applied toward video games, hardware, or other digital items. Users may also connect their accounts to outside marketplaces, where items are converted directly into cash. The Attorney General’s investigation determined that Valve facilitates and assists these third-party marketplaces.

The value of Counter-Strike skins has increased in recent years, drawing attention from investors and speculators who view them as digital assets. In March 2025, reports placed the market for Counter-Strike skins above $4.3 billion. High resale values, combined with access to outside trading platforms, have also led to criminal activity. Valve has received hundreds of thousands of support requests from users reporting compromised Steam accounts or fraudulent transfers of items.

The complaint describes the loot box structure as “quintessential gambling, prohibited under New York’s Constitution and Penal Law.” With limited exceptions, gambling is unlawful in New York, and the attorney general states that none of those exceptions apply here. The filing also describes the system as particularly pernicious due to its appeal among children and adolescents. It asserts that young players with limited funds may be drawn into spending money in hopes of obtaining rare items that elevate their status within virtual environments. Research cited in the complaint states that children introduced to gambling are four times more likely to develop a gambling problem later in life than those who are not.

“Illegal gambling can be harmful and lead to serious addiction problems, especially for our young people,” James said. “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.”

The lawsuit also references concerns tied to the promotion of games that glorify violence and guns, stating that this contributes to what the attorney general describes as a dangerous epidemic of gun violence, particularly among young gamers who may become numbed to grave violence before their brains are fully developed.

Through the court action, the attorney general seeks a permanent end to gambling-related features in Valve’s games, disgorgement of all ill-gotten gains, restitution for consumers, and financial penalties under New York law.

Debate over the classification of loot boxes has continued for more than a decade, with different regulatory responses worldwide. China, South Korea, and other nations require companies to disclose item probabilities in specified formats. In Australia, the inclusion of loot boxes results in an M rating, indicating the game is not recommended for children under 15, though not legally restricted. Titles featuring simulated gambling receive an R18+ rating and cannot be sold to minors. Belgium has pursued a full prohibition of loot boxes, though enforcement has faced challenges.

This lawsuit follows a range of enforcement steps taken by Attorney General James focused on internet safety and unlawful gambling within New York. Earlier this month, ahead of the Super Bowl, she issued a warning to residents regarding the dangers associated with sports betting and prediction markets. In February, she partnered with a bipartisan group of 39 attorneys general to call on Congress to approve the Senate version of the Kids Online Safety Act (KOSA). During 2024, she backed New York’s SAFE for Kids Act, legislation designed to curb addictive social media feeds for individuals under 18. She is currently heading bipartisan coalitions in separate legal actions against Meta and TikTok over alleged mental health harms affecting young people. In the previous year, her office halted 26 online casinos that had been operating in New York while portraying themselves as lawful sweepstakes platforms.