Counter-Strike Maker Says It Is Not A Gambling Company

Valve, the maker of Counter-Strike, has asked a Manhattan court to dismiss New York Attorney General Letitia James’ lawsuit accusing the company of running an illegal gambling operation through video game loot boxes.

In a motion filed May 18 in New York County Supreme Court, Valve’s attorneys argue that opening a loot box is no different than buying a pack of baseball cards, and that “no legislature or court has ever deemed that act illegal gambling.” The company says the state’s case “finds no support in the statutory text, case law, or common sense.”

The filing turns on the legal definition of gambling. Under New York’s penal code, a person is gambling only if they stake or risk something on a chance outcome. Valve is arguing there is no risk. A player spends $2.49 on a key, opens a box, and receives exactly one skin — a cosmetic item that changes how a weapon or character looks but does not affect gameplay. The odds of receiving each item are disclosed before purchase.

“Because every player always receives exactly what he paid for — one skin per mystery box — there is no ‘stake’ or ‘risk,'” the motion states.

No value?

Valve also argues that skins are not “something of value” under the gambling statute, because they cannot be redeemed for cash. Players can sell skins on Valve’s Steam marketplace, but only for store credit that does not convert to cash. The attorney general contended that a buyer could still turn a skin into money through a series of separate transactions, such as selling the skin for Steam credit, using the credit to buy hardware, then reselling the hardware at an electronics store. Valve says the statute does not cover that kind of multi-step transaction.

The company also argues that James’ reading of the law would cover a wide range of common products.

“Can a child reach into a cereal box and grab a surprise toy?” the filing asks, comparing loot boxes to baseball card packs, Happy Meals, Labubus, and arcade games at Chuck E. Cheese.

Valve notes that it has sold loot boxes openly for more than a decade, paid New York taxes on those sales, and that no other state has banned them. For those reasons, the filing says, “Valve had absolutely no reason to think its conduct was illegal.” The company also argues that the New York legislature has repeatedly declined to outlaw loot boxes, and that James is trying to accomplish through litigation what lawmakers have not done through legislation.

The motion asks the court to “dismiss this misguided lawsuit with prejudice.”

The case is before Justice Nancy Bannon.