New York Attorney General Letitia James has filed a lawsuit against Valve Corporation, accusing the video game company of promoting illegal gambling through some of its most popular games played by children and teenagers.
According to the official document, Valve’s games, including Counter-Strike 2 (CS2), Team Fortress 2, and Dota 2, allow players to pay money to open virtual “loot boxes.” These loot boxes give players a random digital item. The process looks similar to a slot machine, with a spinning wheel that lands on a prize.
The lawsuit argues the prizes are cosmetic items such as character hats or weapon skins. They do not improve gameplay. However, some of these items are very rare and can be sold online for large amounts of money. Attorney General James said Valve has made billions of dollars by encouraging users, including minors, to spend money for the chance to win valuable virtual items.
“Illegal gambling can be harmful and lead to serious addiction problems, especially for our young people,” James said. “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 also claims that Valve sets the odds for the loot boxes and makes some items much harder to win than others. Because rare items are harder to get, they become more valuable. In fact, in recent years, the market for Counter-Strike skins has grown quickly. In May 2025, the market value of these skins had surpassed $5 billion.
Players can sell the items they win in two ways. They can use Valve’s Steam Community Market to trade items for credit, which can then be used to buy other games or hardware. They can also connect their accounts to third party marketplaces where the items can be sold for real cash. The Attorney General’s office says Valve helps support these outside marketplaces.
Notably, this comes months after Valve introduced a major new rule banning the promotion of skin gambling, case opening, and skin trading websites at officially licensed esports tournaments that use its games, including Counter-Strike 2.
Because the items can be worth so much money, they have become targets for theft. Valve has received hundreds of thousands of support requests from users who say their Steam accounts were hacked or that they were tricked into giving away their items.
The lawsuit says loot boxes can be especially harmful to children. Young players may spend money hoping to win rare items that increase their status in the game. Research shows that children who are introduced to gambling are four times more likely to develop gambling problems later in life.
Although the lawsuit focuses on gambling, the Attorney General’s office also replicated concerns about games that promote violence and guns, saying they may contribute to desensitization among young players.
The Attorney General is asking the court to permanently stop Valve from offering gambling features in its games in New York. The lawsuit also seeks to recover profits the company allegedly earned from these features and to impose fines.
The Counter-Strike 2 skins market has seen sharp swings in the last month. After Valve’s knife trade up contract update last year, an estimated $1.7 to $2 billion in market value was wiped out within hours, a drop of about 30 to 36 percent from roughly $6 billion to about $4 to $4.6 billion.
The Esports Radar will provide updates as the story develops.
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