New York Attorney General Sues Valve Over Loot Box Gambling Allegations

Lawsuit Targets Loot Box System

NEW YORK — The New York attorney general has filed a lawsuit against Valve Corporation, alleging the video game developer promotes illegal gambling through the use of loot boxes in its games.

Valve is the developer behind major titles including Counter-Strike, Team Fortress, and Dota. The complaint focuses on in-game “skins,” virtual items that players can obtain by opening loot boxes.

Loot boxes require players to spend money for the chance to receive a randomly assigned virtual item. The skins allow players to visually customize in-game equipment but do not affect gameplay or provide competitive advantages.

Virtual items vary in rarity. Some are common, while others are extremely rare. Valve also publishes the odds of receiving specific items from each loot box.

Once obtained, players may keep the item or sell it on the Steam Community Market. The marketplace allows players to exchange items for Steam Wallet funds, which can be used to purchase other items on the platform.

Claims of Illegal Gambling

The lawsuit alleges Valve’s loot box system violates Article 1, Section 9 of the New York State Constitution. That provision prohibits lotteries and other forms of gambling unless they are authorized under state law.

The complaint includes three claims tied to the company’s operation of loot boxes.

The first claim alleges a constitutional violation related to unauthorized lotteries. The second claim accuses Valve of promoting gambling in the second degree by knowingly advancing or profiting from gambling activity. The third claim alleges promoting gambling in the first degree through bookmaking or receiving money tied to a lottery-style scheme.

New York Penal Law Article 225 defines gambling as staking something of value on the outcome of a contest of chance or future event that is outside the player’s control, with the expectation of receiving something of value if a certain outcome occurs.

The complaint argues that purchasing a loot box and receiving a random item could meet those conditions.

Dispute Over “Something of Value”

A central issue in the case is whether the virtual items qualify as “something of value” under New York law.

The state defines something of value broadly. It includes money, property, objects exchangeable for money or property, or any credit or promise involving the transfer of money, property, or services.

According to the attorney general’s complaint, loot box items meet that definition for two reasons. First, skins can be sold on the Steam Community Market for Steam Wallet funds that allow players to purchase other items on the platform. Second, the complaint alleges that the items can also be sold for cash through third-party marketplaces.

Valve’s Steam Subscriber Agreement treats virtual items as licenses rather than property. Under the agreement, ownership rights remain with Valve or the item’s creator.

Prior Cases May Shape the Dispute

Valve is likely to argue that its virtual items do not have real-world monetary value.

Courts in California have previously ruled that loot box items were not “things of value” under that state’s law. In Mai v. Supercell Oy, a federal court found that items obtained from loot boxes could only be used within the games themselves and could not be cashed out for real-world money.

Another case, Taylor v. Apple, Inc., reached a similar conclusion, citing the lack of transferable real-world value associated with the items.

Valve may also rely on a 2022 case in Washington state. In that case, the U.S. Court of Appeals for the Ninth Circuit upheld a ruling rejecting claims that Valve’s loot box system violated the state’s consumer protection law by facilitating illegal underage gambling. The court noted that Washington courts and lawmakers had not classified loot boxes as gambling.

Washington’s gambling statute defines “thing of value” in the same way as New York law.

The New York case could test whether those earlier rulings influence how courts evaluate loot boxes under New York’s gambling laws.