New York Attorney General

Valve has filed a motion to dismiss the New York Attorney General's lawsuit against the company. The lawsuit claims that loot boxes in games such as Counter-Strike 2 promote illegal gambling and pose a risk of addiction to children. New York Attorney General Letitia James has accused Valve of making billions of dollars by allowing children and adults to gamble illegally for the chance to win valuable virtual prizes. She described loot boxes as "addictive and harmful." According to a report from Courthouse News, Valve, the company behind Steam, argued that it would be a slippery slope to deem loot boxes illegal gambling. The company pointed out that this would mean other items, such as baseball cards, Happy Meal toys, and Labubu blind boxes, would also be considered gambling. Valve stated, “Each of those transactions - and many more like them - involves a purchase of randomized items that can be resold for cash. No court has allowed the executive branch to criminalize overnight such ‘a breathtaking amount of commonplace’ conduct not specifically proscribed by a statute. This court should not be the first.” The company added, “People enjoy surprises. Part of the appeal of many popular collectibles, from baseball cards to cereal boxes, is the possibility of opening a sealed package and being surprised with a rare item. … No legislature or court has ever deemed that act illegal gambling.” Valve's stance echoes a similar comment from an EA executive who responded to concerns around Ultimate Team card packs. “We don't call them loot boxes, we call them surprise mechanics,” the executive stated. Despite multiple attempts from various authorities worldwide to clamp down on loot boxes, video game publishers have largely continued to operate them as they have done for years. In March, Valve released a rare public statement addressing the New York lawsuit. The company noted that generations have grown up with Pokémon and Magic the Gathering cards. “Players don't have to open mystery boxes to play Valve games,” it said at the time. “In fact, most of you don't open any boxes at all and just play the games - because the items in the boxes are purely cosmetic, there is no disadvantage to a player not spending money.” Valve also detailed its efforts to combat accounts that use Valve items on gambling sites, which it said violates the Steam Subscriber Agreement. Valve stated, “NYAG proposes to take away users’ ability to transfer their digital items from Valve games. Transferability is a right we believe should not be taken away, and we refuse to do that.” It continued, “We respect New York's right to determine the laws governing behavior in the state. We will of course comply if the New York legislature passes laws governing mystery boxes - something it has not done despite considering the issue a few times.” Valve explained that such laws would be the result of a public process, presumably with input from the industry and New York gamers. The type of commitments the NYAG demanded from Valve went far beyond what existing New York law requires and even beyond New York itself. It may have been easier and cheaper for Valve to make a deal with the NYAG, but we believed the type of deal that would satisfy the NYAG would have been bad for users and other game developers, and impacted our ability to innovate in game design.” In its motion to dismiss, Valve continued to criticize the lawsuit heavily. “Can parents purchase packs of baseball cards for their children?” it questioned. “Can families go to Chuck E. Cheese to play games of chance and exchange winning tickets for prizes? Can a child reach into a cereal box and grab a surprise toy? All these actions and more could lead to chargeable crimes under NYAG’s interpretation of gambling.” If the NYAG is successful, Valve could be blocked from selling loot boxes to New Yorkers. The NYAG seeks damages worth three times the amount Valve has profited from its loot box business, which is estimated at a $4 billion economy for Counter-Strike items alone.