Valve Corporation Sued By New York Attorney General Over Loot Box Gambling

New York’s Attorney General, Letitia James, has filed a lawsuit against Valve Corporation in a Manhattan court, accusing the company of promoting illegal gambling through its video games. The complaint alleges that Valve’s use of loot boxes amounts to “quintessential gambling”, violating the state’s constitution and penal law. Headquartered in Bellevue, Washington, the company did not immediately respond to requests for comment. 

According to the Attorney General’s Office, Valve’s most popular titles, such as Counter-Strike 2, Team Fortress 2 and Dota 2 allow gambling by requiring users to unlock rare virtual items with real money.  

Slot machine comparisons and item scarcity

Players use loot boxes to purchase keys for opening virtual containers, which offer randomly chosen cosmetic items like character hats and weapon skins. These items do not affect gameplay performance and serve only decorative purposes.

In Counter-Strike 2, its most popular game, the Attorney General states that the features resemble a slot machine with an animated spinning wheel cycling through potential rewards before landing on one outcome. Then, Valve determines the odds, and some items are intentionally made rarer than others. This scarcity pushes up their market value.

The complaint alleges that valuable items are difficult to obtain, while many rewards are worth just pennies. It further states: “Valve’s loot boxes are particularly pernicious because they are popular among children and adolescents.”

Billions in revenue and a secondary trading ecosystem

Attorney General James claims that Valve generated billions of dollars by selling keys for unlocking loot boxes. The lawsuit argues that the company encouraged users, including many young people, to spend for the possibility of securing high-value virtual goods.

Despite lacking functional utility within the games, certain rare items have fetched significant sums. One cosmetic item was reportedly sold for more than $1 million. The market for Counter-Strike skins has grown into a major trading environment. In March 2025, the market’s value was reported to have exceeded $4.3 billion.

Valve operates the Steam platform, enabling users to directly download games and trade digital items. Through the Steam Community Market, players can sell won items and spend the proceeds on other games, hardware or virtual goods.

The platform also allows users to connect their Steam accounts to third-party marketplaces and exchange items for cash. The Attorney General’s office said its investigation found that Valve facilitates and assists these external platforms.

The complaint further notes that Valve has received hundreds of thousands of support requests involving hacked accounts or fraudulent transfers of digital items.

Alleged harm to children and requested remedies

The lawsuit emphasizes the impact of loot boxes on minors. It cites research from the Massachusetts Department of Public Health indicating that children introduced to gambling by age 12 are four times more likely to develop gambling problems as adults.

Attorney General James said: “Illegal gambling can be harmful and lead to serious addiction problems, especially for our young people. 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 official release also highlights that children exposed to gambling are four times more likely to develop related issues later in life than unexposed ones. It also references concerns that promoting games with guns and violence might aggravate the gun violence epidemic and contribute to desensitisation  among gamers from a young age.

Lawsuit details and previous cases against loot boxes

The lawsuit seeks a permanent injunction barring Valve from promoting gambling features in its games within New York. Attorney General James is also seeking forfeiture of alleged profits and financial penalties under state law, including restitution for players and fines of up to three times the alleged gains.

Loot boxes have previously drawn regulatory scrutiny. In January 2025, the Federal Trade Commission fined Singapore based Cognosphere, known as HoYoverse, $20 million over claims it misled children about the odds of winning valuable loot box prizes in Genshin Impact. Children below 16 were prohibited from buying loot boxes without parental consent.

The case against Valve is being handled by attorneys within the Bureau of Internet and Technology under the Division of Economic Justice. This filing represents the latest enforcement effort by Attorney General James to curb alleged illegal gambling activity and protect minors in digital environments.