New York Targets Counter-Strike's Loot Boxes in Lawsuit

Valve currently finds itself in the middle of what could turn out to be a ground-breaking lawsuit. 

For well over a decade, video game loot boxes have stirred up serious controversy. Countless lawsuits from private plaintiffs filed against companies behind these games have, for the most part, led nowhere, though. 

Most recently, a case down in Austria was brought against Electronic Arts (EA) and Sony by a class of gamers – who claim to have spent a combined €20,000 on loot boxes across multiple FIFA installments – but the Supreme Court of Austria ruled that the loot boxes do not, in fact, constitute gambling due to the involvement of ‘skill’. 

However, a fresh lawsuit from New York Attorney General Letitia James, specifically targeting Valve Corporation, the creator of huge titles like Counter-Strike and Dota 2, could shake the industry up. 

This particular lawsuit is tackling an entirely new angle not seen in previous attempts and if it turns out to be successful, video game loot boxes may be in trouble.  

Loot Box System Used by Valve Can Lead to Addiction, According to the New York AG’s Complaint 

The sole reason why New York is opting to target Valve’s popular loot box system is because the state claims it amounts to illegal gambling, much of which involves targeting children and teenagers. 

In the official complaint filed by AG Letitia James, Valve is accused of making “tens of millions of dollars selling keys to thousands of New York residents” that can “lead to action and result in real harm.” 

Valve sells keys as paid virtual items so that players can then use them to unlock virtual loot boxes and receive randomly selected in-game items in return, such as weapon skins and cosmetic items. 

These types of loot boxes, seen across the majority of popular video games today, not just Valve’s Counter-Strike, have proven to be so profitable over the past two decades that real-life versions of loot boxes are now available in the form of ‘mystery boxes’, shown on the FreakyGaming.com platform. 

Interestingly, the items that players receive from Valve's loot boxes can be traded on Steam’s official community market or via other trusted third-party marketplaces, giving New York a fresh legal angle to attack Valve with. 

Whereas almost all previous lawsuits targeting loot boxes have taken the approach that all loot boxes themselves constitute a form of gambling, AG Letitia James presents the case that these items have legit monetary value in the real world and that they aren’t merely cosmetic in-game items. 

The lawsuit highlights a specific case from 2024, where a Counter-Strike AK-47 ‘Blue Gem’ skin famously sold for more than $1 million on the marketplace (X/Twitter user @roflm0nster bragged that he wouldn’t disclose the specific amount it sold for, but that he “rejected several $1 million offers”). 

And according to CSMarketCap, the current CS2 skin market itself is valued at around a staggering $6.4 billion, highlighting that the contents of these loot boxes do, seemingly, have real-world value, despite Valve claiming that not to be the case. 

Valve Denies Gambling Claims 

In response to the New York lawsuit, Valve put out a direct statement via Steam, the hugely popular PC gaming platform that it owns. 

“You may have seen the New York Attorney General recently filed a lawsuit against Valve claiming mystery boxes (like crates, cases, and chests) in some of our games violate New York gambling laws. We don't believe that they do, and were disappointed to see the NYAG make that claim after working to educate them about our virtual items and mystery boxes since they first reached out to us in early 2023.

To date we've locked over one million Steam accounts that were being misused by third parties in connection with gambling, fraud, and theft. 

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.

Ultimately, a court will decide whose position—ours or NYAG's—is correct. In the meantime, we wanted to make sure you were aware of the potential impact to users in New York and elsewhere.”

Simply put, Valve argues that its loot box system, along with players’ ability to trade loot box content on third-party marketplaces, does not constitute gambling at all and that the system itself is designed in no way to facilitate gambling-related activity, particularly among its younger audiences. 

And since putting out the statement, Valve has filed a motion to dismiss the case, saying that the virtual loot box items aren’t something of value under New York gambling law, putting forward the defence that loot boxes, which players pay roughly $2.50 each for, are no different from baseball cards or Happy Meal toys, as you don’t know what you’re going to receive. 

Loot Boxes Could Face Same Fate as Sweepstakes Casinos 

It’s not just video game loot boxes that New York has taken issue with over recent times. 

As part of its targeted crackdown on what it deems to be illegal gambling, the state also banned sweepstakes casinos last year, outlawing them via Senate Bill S5935A, which was signed into law in December 2025.

Similarly, sweepstakes casinos allow players to purchase virtual ‘Sweeps Coins’, which can then be used to play available casino games and potentially redeem prizes, including gift cards and cryptocurrencies. 

Despite Sweeps Coins technically not having any real-world value, much like Counter-Strike’s loot boxes, the argument made from New York lawmakers was that these virtual coins effectively function as a workaround substitute for traditional US dollar gambling, and it allowed New York, as well as California and a dozen other states, to successfully outlaw sweepstakes casinos. 

What’s Next for Counter-Strike Players in New York? 

For now, at least, Counter-Strike 2 remains available for all New York gamers to download via the Steam store. 

The game’s popular loot boxes are still available for purchase, too, and will remain so until the ongoing lawsuit is settled. 

Fans of the Counter-Strike franchise in New York don’t need to worry about the game itself being banned, as that’s extremely unlikely. 

What comes next will be either the lawsuit is dismissed in Valve’s favour, just as many cases against other companies offering loot box games have been in the past, or the case will proceed to trial. 

New York has recently been successful with its crackdown on sweepstakes casino gambling, and has even targeted popular prediction market platforms like Kalshi and Polymarket, so Valve’s loot boxes are the latest frontier in the state’s crackdown on what it deems to be unregulated gambling. 

If successful, it would be the first significant US-based legal victory against video game loot boxes, potentially triggering what could be the start of a broader attack against the loot box market.