Valve Corporation has officially filed a motion in a New York court to dismiss the lawsuit filed by New York Attorney General Letitia James over loot boxes in games like Counter-Strike 2, Team Fortress 2, and Dota 2.

The lawsuit, filed earlier this year by James, claimed Valve runs an illegal gambling operation through in-game loot boxes, also called cases, crates or treasures. Players spend money to open these boxes and receive random in-game cosmetic items.

The Attorney General argued these systems work like slot machines because players pay for a chance to receive rare items, some of which can later be sold or traded for large amounts of money on third-party marketplaces. The lawsuit also claims the systems are especially harmful to younger players.

However, Valve denied those claims in a motion filed on May 18. The company said its loot box systems are not gambling and are instead similar to buying baseball card packs or surprise toys in cereal boxes. Players always receive an item when opening a loot box, meaning there is no real “risk” or “loss” involved. Valve also argued that skins are cosmetic only and do not affect gameplay.

“Like baseball cards, these digital items, called ‘skins,’ are designed for entertainment and have subjective and aesthetic value to users,” Valve said in the filing. Valve also said skins cannot officially be exchanged for cash through Steam. While players can trade or sell skins on the Steam Community Market, the money stays inside Steam Wallet accounts and cannot be withdrawn as cash.

The company acknowledged that third-party websites exist where players privately sell skins for real money but said those sales are against Steam’s rules and are not controlled by Valve. However, they have already enforced a ban on the promotion of skin gambling, case-opening, and skin trading websites at officially licensed esports tournaments.

Valve further argued that New York’s gambling laws were never meant to apply to loot boxes and that no US state has previously ruled such systems illegal. The filing says Valve has openly offered these features for more than a decade and has paid New York taxes on related sales during that time.

Finally, Valve warned that accepting the Attorney General’s interpretation could have broader consequences beyond video games. The filing asked whether baseball card packs, arcade prize games or cereal-box toys could also be considered illegal gambling if the court accepts New York’s argument.

Subscribe to On The Radar, a weekly wrap up of esports business stories, and the fortnightly Heat Map, a deeper dive into the stories across esports business and culture.

Follow The Esports Radar on social media: