New York attorney general accuses Valve of promoting illegal gambling through loot boxes
New York sues Valve, alleging loot boxes in major games amount to illegal gambling targeting young players.
New York’s top law enforcement official has launched legal action against Valve, alleging that the video game company has facilitated illegal gambling through the use of loot boxes in several of its most popular titles.
Table Of Content
Letitia James filed the lawsuit on behalf of her office following an investigation into the company’s business practices. The case centres on the sale of virtual loot boxes in games including Counter-Strike 2, Team Fortress 2 and Dota 2. According to the complaint, these systems encourage players to pay for a chance to receive rare in-game items, a model the Attorney General describes as unlawful gambling under New York law.
In a statement announcing the lawsuit, James argued that the practice is especially harmful because children and teenagers widely play the games involved. Her office contends that the structure of loot boxes closely resembles traditional gambling and may expose young players to addictive behaviours at an early age.
Investigation claims loot boxes amount to gambling
The lawsuit outlines how the loot box system operates within Valve’s games. Players purchase virtual chests or cases and must also buy digital keys to unlock them. Once opened, the contents are revealed at random, with some items considered highly rare and valuable. The Attorney General’s office describes this as “quintessential gambling”, as users stake money on an uncertain outcome in the hope of receiving a prize.
The complaint cites research suggesting that early exposure to gambling increases the risk of developing gambling addiction later in life. It argues that introducing such mechanics in games popular with minors is “particularly pernicious”. Under New York law, most forms of gambling are prohibited unless specifically authorised, and the lawsuit claims that Valve’s system falls outside those permitted categories.
According to the filing, Valve has generated significant income through this model. The company is said to have sold billions of dollars’ worth of Counter-Strike keys alone. In addition to revenue from key sales, the lawsuit alleges that Valve has earned tens of millions of US dollars in fees through transactions on the Steam Community Market, where players can trade virtual items.
The Attorney General’s office maintains that the combined effect of loot box sales and item trading creates an ecosystem that mirrors gambling markets. It argues that players are incentivised to keep purchasing cases in pursuit of rare items that may later be sold for profit.
Third-party marketplaces and real-world money
Beyond Valve’s own platform, the lawsuit focuses on the role of third-party websites that allow players to sell in-game items for real-world cash. While items traded on Steam are typically credited to a user’s Steam Wallet, external marketplaces enable direct cash transactions.
James’ office alleges that Valve not only permits this activity but actively facilitates and assists these third-party operations. The complaint suggests that the company’s systems enable virtual items obtained through loot boxes to be converted into cash, reinforcing the argument that the mechanic amounts to gambling.
Valve has previously denied involvement with such external marketplaces. In response to an earlier inquiry from the Danish Gambling Authority, the company stated that third-party websites create so-called sock puppet accounts to exchange items for money. “[T]his behaviour is in violation of our terms of service,” Valve said at the time, distancing itself from those transactions.
At the time of writing, Valve has not publicly responded to the latest lawsuit.
A booming market for digital skins
The legal action also highlights the scale of the market for cosmetic items, commonly known as skins, particularly in Counter-Strike. The lawsuit references a 2025 Bloomberg report that estimated the Counter-Strike skins market had surpassed US$4.3 billion.
The most expensive skin in Counterstrike history was publicly sold this morning, a StatTrak Factory New AK-47 Blue Gem pattern 661
— Jake Lucky 🔜 GDC (@JakeSucky) June 5, 2024
For over $1 million pic.twitter.com/1FdxoNM2ov
Such figures underline the significant financial stakes involved. As an example of sums exchanged, the complaint cites the reported sale of a rare Counter-Strike 2 AK-47 skin in 2024 for US$1 million. Transactions of this size, the Attorney General argues, demonstrate that the virtual items carry real monetary value and further blur the line between gaming and gambling.
The Attorney General’s office is seeking a court order to prevent Valve from continuing practices it believes breach New York law. It also asks the court to require the company to forfeit profits allegedly earned through illegal conduct and to impose a financial penalty equal to three times the amount allegedly generated from those activities.
The outcome of the case could have wider implications for the video game industry, where loot boxes and virtual item trading remain common features. Regulators in several jurisdictions have examined similar systems in recent years, but approaches vary considerably.
For now, the New York lawsuit represents one of the most direct challenges yet to the business model underpinning some of the world’s most popular online games, raising fresh questions about consumer protection and the boundaries between entertainment and gambling.
