New York Attorney General Sues Valve, Says Loot Boxes are Illegal Gambling

^{Valve’s Counter-Strike features purchasable loot boxes that award randomized cosmetic items, a mechanic that New York's Attorney General argues violates state gambling laws. (Photo: Rokas Tenys / Alamy)}

New York Attorney General Letitia filed a lawsuit on Wednesday against a video game developer, alleging that its use of “loot boxes” in its popular video games amounts to illegal gambling that targets young people.

James pointed to several of Valve’s biggest games as offenders, including Counter-Strike 2, Team Fortress 2, and Dota 2.

Loot Boxes Include Valuable Cosmetic Skins

Loot boxes are available in all three games named in the lawsuit. Players can open and often pay for the chance to open a random cosmetic prize that can be used in-game. These alter the appearance of weapons or characters but do not affect gameplay performance. 

Rare items can prove to be quite valuable on the secondary market, with a unique AK-47 skin for Counter-Strike reportedly selling for over $1 million in June 2024.

Because of that resale market, there is a significant trade and investment in the cosmetic skins. According to the lawsuit, the attorney general argues that teenagers and younger children engage in gambling via loot boxes in the hopes of opening expensive skins that they can then sell for high prices. 

“Valve has made billions of dollars by letting children and adults alike illegally gamble for the chance to win valuable virtual prizes,” James said in a press release. “These features are addictive, harmful, and illegal, and my office is suing to stop Valve’s illegal conduct and protect New Yorkers.”

The lawsuit seeks to permanently end Valve’s practices, which James alleges are illegal gambling in its games. It also seeks to make Valve pay fines and to have it surrender its profits from the illegal activity.

International Scrutiny of Loot Boxes

Loot boxes have long been a source of concern for lawmakers and gambling regulators, particularly in Europe.

 In 2018, Belgium’s Gaming Commission determined that loot boxes that could be bought for real money were in violation of the country’s gambling laws. That meant developers like Valve and EA – the maker of the FIFA series of soccer games and other sports titles – could be criminally liable if they continued to allow the purchases of loot boxes. Today, loot boxes are legal only in Belgium if they are available for free or earned through gameplay achievements.

Last year’s European Union AI Act also addressed loot boxes, though it did not ban them entirely. Instead, it banned the use of AI to trick users based on their behavior, with one example being changing the odds of loot boxes to frustrate or tempt players based on how they’re interacting with the random pulls.

Problem gambling organizations have also pointed to loot boxes as a potential gateway into gambling, especially for young boys. Multiple studies have shown that teenagers often experience gambling-like activities via video games. A2026 study from Common Sense Media found that 36% of boys aged 11 to 17 in the United States had gambled in the last year, while the UK’s 2025 Young People and Gambling Survey found that 49% of people in that same age group reported some interaction with gambling over the previous year.