New York sues video game developer Valve, says its ‘loot boxes’ are gambling

New York’s attorney general sued Valve, a video game developer whose franchises include Counter-Strike, Team Fortress and Dota, accusing it of promoting illegal gambling and threatening to addict children through its use of “loot boxes.”

In a complaint filed on Feb. 25 in a state court in Manhattan, Attorney General Letitia James said Valve’s loot boxes amounted to “quintessential gambling,” violating the state’s constitution and penal law, with valuable items often hard to win and many items worth pennies.

Valve, based in Bellevue, Washington, did not immediately respond to requests for comment.

Loot boxes let players use real money to buy chances to win virtual items, such as decorations for characters and weapons, in an effort to convey status.

James said Valve generated billions of dollars of revenue by selling “keys” to open loot boxes, including in one game where the process resembled a slot machine as a wheel whirred through various items before stopping.

The attorney general said key sales advanced Valve’s unusual business model of letting players sell items they won on its virtual marketplace, Steam Community Market, and on other marketplaces.

“Valve’s loot boxes are particularly pernicious because they are popular among children and adolescents,” according to the complaint.

Children introduced to gambling by age 12 are four times more likely to become problem gamblers as adults, the complaint added, citing the Massachusetts Department of Public Health.

James is seeking restitution for players, plus a fine of three times Valve’s alleged illegal gains.

Loot boxes for video games have been the subject of other regulatory action.

For example, in January 2025, the U.S. Federal Trade Commission fined Singapore-based Cognosphere, the maker of Genshin Impact, $20 million for deceiving children and others about the odds of winning valuable loot-box prizes.

Children under 16 were also blocked from buying loot boxes without parental consent. Cognosphere, doing business as HoYoverse, did not admit wrongdoing, the FTC said.