A new suit filed by the New York attorney general seeks to stop Valve Software’s use of “loot box” mechanics in its popular PC games, accusing the Bellevue, Wash.-based company of making billions of dollars by luring children and teenagers into gambling on rare Counter-Strike skins.
The lawsuit alleges that Valve’s first-party games are essentially an illegal gambling operation aimed at younger players. It seeks to stop Valve from implementing loot box mechanics in its games going forward, as well as hit the company with a fine equal to “three times the amount of its gain from the illegal practices alleged herein.”
While it’s arguably best known for running the digital gaming marketplace Steam, Valve Software also owns and operates several of its own popular PC games, including Counter-Strike 2, Dota 2, and Team Fortress 2.
All three games feature an optional mechanic where players can pay real money in exchange for “loot boxes”: a virtual item that drops a randomly-generated piece of cosmetic gear that can be used in-game. Most of these items have no mechanical impact and are there strictly for looks, such as silly hats in TF2 or neon-painted “weapon skins” in CS2. This might not make sense to you, but there are people in this world who will pay any price to get an appropriately ugly virtual rifle, and these people are part of why Valve CEO Gabe Newell has a superyacht.
Despite their lack of actual effect, loot boxes and item trading are both an extraordinarily lucrative market for Valve. Virtual items for these three games have been sold for staggering amounts of real money. One estimate cited by the AG’s office indicates that the market for Counter-Strike skins alone was worth over $4.3 billion as of last year.
While Valve absolutely benefits from the strangely frenetic market for virtual items in CS2, TF2, and Dota 2 — it sells these loot boxes in the first place, and hosts the secondary market for them via the in-app Steam Marketplace — the occasionally shocking prices for these items is part of a player-created economy. The lawsuit may be partially aimed in the wrong direction.
In an official press release, New York Attorney General Letitia James wrote that “illegal gambling can be harmful and lead to serious addiction problems… 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.”
GeekWire reached out to Valve for further comment.
The suit against Valve marks the latest in a series of moves by James to tamp down on gambling operations within New York state, such as shutting down 26 online casinos last year, as well as taking aim at Meta and TikTok for those platforms allegedly posing “harms to young people’s mental health.”
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