Just two weeks after New York filed suit against it, video game developer and Steam platform operator Valve Corporation has responded to the state’s allegations. In a letter to Steam customers posted to the support section of its website, the company rejected New York Attorney General Letitia James’ claim that the company’s loot boxes are nothing more than illegal gambling, defending the mechanics as widely used in video games as well as in the real world.
New York has taken issue with the loot boxes found in popular Valve titles, such as Counter-Strike 2, Dota 2, and Team Fortress 2, saying they violate the state’s gambling laws.
In the March 11 letter responding to the allegations, Valve said it was “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.”
Valve’s response comes just days after the Bellevue, Washington-based developer was hit with its second legal challenge over the game mechanic this year: a proposed class action lawsuit filed in U.S. District Court for the Western District of Washington accusing the company of running an unlawful gambling enterprise through its loot box system.
Valve Defends ‘Mystery Boxes’
In pushing back against the New York lawsuit, Valve’s main argument is that there’s nothing new about its “mystery boxes” and that they’re not inherently unlawful. The company frames the random-reward products in its video games as having been part of consumer culture for generations.
Valve compares its in-game boxes to physical products like baseball cards, Pokémon, Magic: The Gathering, and Labubu. Valve also points out that digital products that look a lot like today’s loot boxes have been used in video games since 2004.
The company emphasized that players don’t have to open loot boxes to play its games and claims most don’t.
“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,” the company writes in the letter.
In explaining why it didn’t give in to New York’s demands during the investigation, Valve pushed back hard on the remedies the state had requested. It said the attorney general’s office seemed to want to take away players’ ability to transfer loot boxes and their contents to other users.
Removing transferability, Valve argues, would prevent users from trading or selling digital items in the same way they would physical collectibles. “Transferability is a right we believe should not be taken away, and we refuse to do that,” the company said.
Valve also accuses the attorney general of asking it to use “invasive technologies” to ensure gamers aren’t masking their location to conceal their presence in the state. It also took issue with the attorney general’s request that the company collect more information about its users, beyond using payment methods to verify their age. The company says these demands go too far.
“Valve knows our users care about the security of their personal information, and we believe it’s in our and their interest to only collect the information necessary to operate the business and comply with law.”
If the New York legislature passes a bill that limits the use of loot boxes in games, Valve says it will comply. However, it said the attorney general’s requests exceeded what’s required under current law and that while it would’ve been cheaper for Valve to “make a deal” with the attorney general, it would have been “bad for users and other game developers, and impacted our ability to innovate in game design.”
AG Alleges Predatory Slot Machine Mechanics
While Valve maintains its “mystery boxes” are nothing more than a digital version of collectible packs that have been used for decades, the New York attorney general paints a much darker picture, alleging Valve has engineered a monetization model that is “quintessential gambling.”
In the complaint filed on February 25, the state argues that opening a loot box in Counter-Strike “resembles a virtual slot machine,” featuring an animated spinning wheel that often displays “near misses” to entice further spending. “Valve has made billions of dollars by letting children and adults alike illegally gamble for the chance to win valuable virtual prizes,” said James.
The New York lawsuit says that the most common items in loot boxes are worth only “pennies,” while rare items can be sold for thousands, or even more than $1 million, on secondary markets. According to the complaint, Valve has helped sustain a market where some rare items can be resold for significant sums.
The attorney general’s investigation found that Valve allows the sale of these items on its own Steam Community Market, where it collects a 15% commission, and also supports third-party marketplaces that allow users to “cash out” for real-world currency.
The class action lawsuit filed in Washington makes a similar argument, claiming that Valve has built a “slot machine economy” around loot boxes.
For its part, Valve says it has locked over one million Steam accounts for misuse related to gambling and fraud and says it doesn’t cooperate with third-party gambling sites.
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Just two weeks after New York filed suit against it, video game developer and Steam platform operator Valve Corporation has responded to the state’s allegations. In a letter to Steam customers posted to the support section of its website, the company rejected New York Attorney General Letitia James’ claim that the company’s loot boxes are
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