Valve is in hot water over loot boxes in New York

• Valve is facing pressure over its loot box model in New York
• A new lawsuit alleges that Valve allowed "illegal gambling" to thrive
• The loot boxes sold by the company in games such as Team Fortress 2, Dota 2, and Counter-Strike 2 could be potentially harmful to children, the complaint alleges

Valve, the creator of popular blockbuster video games such as Dota 2, the Counter-Strike franchise, Team Fortress2, and others, is facing more legal pressure in New York, with the company now targeted by the Office of the Attorney General (OAG).

Valve in trouble with New York’s AG over loot box model

In a statement, the OAG argues that Valve’s video games entice players to spend money on digital purchases that could have a "significant material value."

This is not the first time Valve has faced such backlash, after a landmark lawsuit in 2016, which accused the company of pushing underage gambling due to the proliferation of skin betting sites.

Back then, Valve moved swiftly to crack down on such websites and issue cease-and-desist letters, but the skin gambling industry, referring to the virtual goods that the OAG is now using as the basis of its latest case, has continued to thrive in the shadows.

Some of these digital items could be sold for more than $1,000,000, the complaint alleges, and Valve has made billions of dollars by offering these products to its consumer base, many of whom are teenagers or younger.

The OAG directly refers to digital goods as "promoting illegal gambling" and is also looking to have the company pay disgorgement and fines.

Attorney General Letitia James had this to say in a statement shared on her office’s website: "Illegal gambling can be harmful and lead to serious addiction problems, especially for our young people. 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."

AG argues that loot boxes and digital goods of significant value are "illegal gambling"

Loot boxes have been a long-debated aspect of online gaming, with some countries, such as Belgium and the Netherlands, taking a dim view of them and ordering companies to refrain from offering them on their respective territories.

Others, though, have been hesitant. While most experts agree that loot boxes have "gambling-like mechanics," most countries have stopped short of designating them gambling.

AG James’ complaint detailed that loot boxes, which disburse the cosmetic digital goods of significant value, are based on random odds, resembling casinos.

"Valve intentionally makes some items far harder to win than others, making the rare items more valuable. Despite having no in-game functionality, these virtual items can be extremely valuable, with the rarest items selling for thousands of dollars online," the complaint reads.

Specifically, Valve allows users to "sell" skins through Valve’s virtual marketplace or the Steam Community Market, with any money realized available to be spent on hardware, other games, and goods in the Steam ecosystem.

"Valve has received hundreds of thousands of support requests from users reporting that their Steam accounts had been hacked, or that they had been tricked into transferring items to a bad actor," the complaint continues, with AG James insisting that the loot box model can be particularly harmful to children.

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