By Holt Hackney
New York Attorney General Letitia James filed a lawsuit in early February against Valve Corporation, alleging the company promotes illegal gambling through popular video games that include slot machine-like features and attract millions of young users.
The complaint, announced Feb. 25, targets Valve’s widely played titles, including Counter-Strike 2, Team Fortress 2, and Dota 2. According to the Office of the Attorney General (OAG), these games allow players to pay for the chance to win rare virtual items through in-game “loot boxes,” a system the lawsuit claims violates New York gambling laws.
“Illegal gambling can be harmful and lead to serious addiction problems, especially for our young people,” James said in a statement. “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.”
Valve, a developer, publisher, and distributor of video games, also operates the Steam platform, which allows users to download and play its titles. The lawsuit alleges that Valve’s loot box system mirrors gambling mechanics by charging users for randomized rewards, with odds set by the company.
In games such as Counter-Strike 2, players can purchase virtual containers that, when opened, reveal cosmetic items such as weapon skins or character accessories. The selection process is randomized and presented through animations that resemble slot machines, the complaint states. While the items do not affect gameplay, their rarity can give them substantial real-world value.
State investigators allege that Valve intentionally makes certain items difficult to obtain, increasing their scarcity and market value. Some of the rarest items have sold online for thousands of dollars, with at least one reportedly exceeding $1 million.
The lawsuit further claims that a thriving secondary market has developed around these virtual goods. According to the OAG, users can sell items through Valve’s Steam Community Market, where proceeds can be used to purchase games and other digital content. Additionally, players can link their accounts to third-party marketplaces that allow items to be exchanged for real currency.
The attorney general’s office alleges that Valve facilitates these third-party transactions, effectively enabling users to convert virtual rewards into cash. This, the lawsuit argues, transforms loot boxes into a form of gambling under New York law.
The value of these digital assets has grown significantly in recent years. In 2025, the market for Counter-Strike skins reportedly surpassed $4.3 billion, drawing interest not only from players but also from investors and speculators.
The complaint also raises concerns about security risks tied to the system. Investigators found that Valve has received hundreds of thousands of support requests from users reporting hacked accounts or fraudulent transfers of valuable items. The high monetary value of rare skins has made them attractive targets for theft, according to the OAG.
Attorney General James emphasized the potential harm to younger users, arguing that loot box systems can introduce minors to gambling-like behavior. The lawsuit cites research indicating that children exposed to gambling are four times more likely to develop gambling problems later in life.
The complaint further asserts that young players may feel pressure to spend money in pursuit of rare items that enhance their status within virtual communities. The OAG contends that this dynamic can lead to compulsive spending and financial harm, particularly among users with limited resources.
In addition to its gambling-related claims, the lawsuit references broader concerns about the content of some of Valve’s games, including depictions of violence. The filing argues that exposure to such content, combined with gambling-like mechanics, may contribute to negative developmental outcomes among younger players.
The state is seeking a court order to permanently prohibit Valve from offering loot box features that violate New York law. The lawsuit also requests disgorgement of profits allegedly obtained through the system, along with civil penalties and fines.
The case marks the latest action by James aimed at regulating online platforms and protecting minors. Earlier this month, the attorney general issued warnings about risks associated with sports betting and prediction markets ahead of the Super Bowl. She has also joined a bipartisan coalition of attorneys general urging Congress to pass the Kids Online Safety Act.
In recent years, James has pursued enforcement actions against major technology companies, including lawsuits involving Meta and TikTok, alleging harm to young users’ mental health. Her office has also taken steps to shut down online casinos operating illegally in New York.
The case against Valve is being handled by attorneys and analysts within the Bureau of Internet and Technology, part of the state’s Division of Economic Justice.
