Attorney General James Sues Game Developer for Promoting Illegal Gambling Through Video Games

Valve’s Counter-Strike, Team Fortress, and Dota Games Have Slot Machine-Like Features That Entice Users to Pay for the Chance to Win Rare Prizes That Can Be Exchanged for Money

Lawsuit Alleges Valve’s In-Game “Loot Box” Feature Violates New York’s Gambling Laws and Can Lead to Serious Harms, Especially for Young People

February 25, 2026

NEW YORK – New York Attorney General Letitia James today sued Valve Corporation (Valve), a video game developer, for illegally promoting gambling through video games popular with children and teenagers. An investigation by the Office of the Attorney General (OAG) found that Valve’s video games, including Counter-Strike 2, Team Fortress 2, and Dota 2, enable gambling by enticing users to pay for the chance to win a rare virtual item of significant monetary value. In Valve’s most popular game, the process resembles a slot machine, with an animated spinning wheel that eventually rests on a selected item. The randomly selected virtual items have no in-game functionality but can be sold online for money, with one item reportedly being sold for more than $1 million. The lawsuit alleges that Valve has made billions of dollars luring its users, many of whom are teenagers or younger, to engage in gambling in the hopes of winning expensive virtual items that they can cash in on. With this lawsuit, Attorney General James seeks to permanently stop Valve from continuing to promote illegal gambling in its games and to pay disgorgement and fines.

“Illegal gambling can be harmful and lead to serious addiction problems, especially for our young people,” said Attorney General 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.”

Valve is a developer, publisher, and distributor of video games and the operator of a platform called Steam, which allows users to directly download its games, including Counter-Strike 2, Team Fortress 2, and Dota 2. The lawsuit alleges that Valve enables gambling through these games by charging users for the chance to win a rare virtual item by paying to open a virtual container known as a “loot box.”

The virtual items awarded when a user opens a “loot box” are cosmetic, like a hat for a player’s character or artistic skins for a player’s weapons. Like slot machines, the prizes won from loot boxes are determined randomly in accordance with odds set by the casino, which in this case is Valve. 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 value of Counter-Strike’s skins rose significantly in recent years, attracting speculators and investors who viewed these virtual items as potentially lucrative digital assets. In March 2025, it was reported that the market for Counter-Strike skins had surpassed $4.3 billion.

Image of an AK47 Counter-Strike skin, which reportedly sold for more than $1 million in June 2024

Valve allows users to cash in on the virtual items they have won in two ways. Users can sell the items they won through Valve’s own virtual marketplace, the Steam Community Market, where they can use the proceeds to buy other video games, video game hardware, and other virtual items. Users can also connect their Valve accounts to third-party marketplaces where the virtual items can be sold directly for cash. The OAG’s investigation found that Valve facilitates and even assists these third-party marketplaces in their operations.

The high value of Counter-Strike’s rare skins and the ease of liquidating items through third-party marketplaces have made Valve’s virtual items an attractive target for thieves. 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.

Valve’s loot box model can be especially harmful to children. Attorney General James asserts that young users with limited funds can be enticed to start gambling through loot boxes in the hopes of obtaining a virtual item that they believe will enhance their status in the games’ virtual worlds. Research has shown that children who are introduced to gambling are four times more likely to develop a gambling problem later in life than those who are not. In addition, although this case is about illegal gambling, it is important to note that Valve’s promotion of games that glorify violence and guns helps fuel the dangerous epidemic of gun violence, particularly among young gamers who can become numbed to grave violence before their brains are fully developed.

In the lawsuit filed today, Attorney General James seeks to permanently stop Valve from promoting gambling features in its games, disgorge all ill-gotten gains, and pay fines for violating New York’s laws.

This lawsuit is the latest effort by Attorney General James to protect children online and prevent illegal gambling in New York. Earlier this month, Attorney General James warned New Yorkers of the risks posed by sports betting and prediction markets ahead of the Super Bowl. In February, Attorney General James and a bipartisan coalition of 39 attorneys general called on Congress to pass the Senate version of the Kids Online Safety Act (KOSA) to protect children and their data. In 2024, Attorney General James championed New York’s SAFE for Kids Act to restrict addictive social media feeds for users under 18. Attorney James is currently leading bipartisan coalitions in separate lawsuits against Meta and TikTok addressing the harms to young people’s mental health caused by those platforms. Last year, Attorney James stopped 26 online casinos masquerading as legal sweepstakes from illegally operating in New York.

This matter is being handled by Assistant Attorney Generals Marc Montgomery and Alexandra Hiatt, Data Security Analyst Nishaant Goswamy and Senior Enforcement Counsel Jordan Adler under the supervision of Bureau Chief Kim Berger and Deputy Bureau Chief Clark Russell, of the Bureau of Internet and Technology. The Bureau of Internet and Technology is a part of the Division of Economic Justice, which is led by Chief Deputy Attorney General Chris D’Angelo and overseen by First Deputy Attorney General Jennifer Levy.