New York Attorney General Letitia James sued video game developer and publisher Valve Corporation for using game loot boxes to facilitate illegal gambling activities among children and teenagers.

Valve operates Steam, one of the largest digital game distribution services in the world, offering access to thousands of games for millions of users worldwide. At the time this article was published, Steam was reporting over 29 million players online, with nearly 7.5 million playing a game.

Attorney General James said the gaming giant is violating the state's gambling laws by offering players the opportunity to win random virtual prizes that can be exchanged for real money, in a process described as being similar to a slot machine.

"Illegal gambling can be harmful and lead to serious addiction problems, especially for our young people," said James. "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."

The lawsuit targets loot boxes in Counter-Strike 2, Team Fortress 2, and Dota 2 that award players with random items, such as weapon skins or character accessories. However, the odds of winning rare items are allegedly deliberately skewed by Valve to make them far more valuable, leading the total value of market items to balloon to an estimated $4.3 billion as of March 2025, according to Attorney General James.

Some individual items (such as AK-47 skins) have even fetched prices of over $1 million, making Steam accounts a frequent target for hackers and scammers.

The lawsuit also highlights the potential harm to children, as they may be drawn into loot box purchases to win rare items and boost social status within gaming communities. "Children who are introduced to gambling are four times more likely to develop a gambling problem later in life than those who are not," according to research cited in the Wednesday press release.

Attorney General James has asked the court to permanently bar Valve from operating loot box features in the state, to require the company to return all profits generated by the practice, and to impose fines for the alleged violations.

In January 2025, Genshin Impact developer Cognosphere (aka Hoyoverse) agreed to pay $20 million to settle a U.S. Federal Trade Commission (FTC) lawsuit over unfair marketing of loot boxes to minors, obscuring the actual costs. andmisleading the players about the odds of winning prizes.

BleepingComputer reached out to a Valve spokesperson for comment, but a response was not immediately available.