New York's top prosecutor has filed a lawsuit against video game company Valve, alleging their virtual 'loot box' system constitutes illegal gambling. The suit claims these digital containers, which players pay to open for random prizes, particularly target children and have generated billions in revenue.
New York’s top prosecutor has taken legal action against gaming giant Valve, accusing the company of operating an illegal gambling scheme through virtual prize containers in popular video games.
Attorney General Letitia James filed the lawsuit Wednesday in state court, targeting the company’s use of digital prize boxes in major gaming titles including Counter-Strike 2, Team Fortress 2, and Dota 2. The legal action alleges these virtual containers force players to pay money for random chances at winning rare digital items.
According to James’ office, the Counter-Strike system particularly mimics casino-style gambling, featuring animated spinning wheels that eventually land on prize selections.
“Valve has made billions of dollars by letting children and adults alike illegally gamble for the chance to win valuable virtual prizes,” James stated. “These features are addictive, harmful, and illegal.”
The Bellevue, Washington-based gaming company has not yet responded to requests for comment regarding the allegations.
While these digital prize containers typically contain decorative items like character accessories or weapon designs that don’t affect gameplay, James’ office notes they can command substantial prices in online marketplaces.
The lawsuit reveals that some of the scarcest items have sold for thousands of dollars online, with one particular Counter-Strike AK-47 weapon design recently fetching over $1 million.
James’ legal filing accuses Valve of violating New York’s constitution through its gambling promotion practices. The state seeks to halt these operations and demands the company provide user compensation, damages, and penalties totaling three times the profits earned from these features.
The attorney general’s office points to research indicating that children exposed to gambling activities face four times greater risk of developing gambling addictions in adulthood compared to those without such exposure.
“Loot boxes, like other forms of gambling, can lead to addiction and result in real harm,” the lawsuit states. “But Valve’s loot boxes are particularly pernicious because they are popular among children and adolescents, who are lured into opening loot boxes by the prospect of winning expensive virtual items that convey status in the gaming world.”
James’ office reports that the popularity of these virtual prizes has attracted not only online investors and speculators driving up values, but also criminals who target third-party marketplaces where these digital items are sold for real money.
The company both enables these external trading platforms and operates its own Steam Community Market, where players can sell their virtual items and use the earnings to purchase additional games, gaming equipment, or other digital content.