NEW YORK, NY (February 25, 2026) — New York Attorney General Letitia James on Wednesday sued Valve Corporation, alleging the company illegally promotes gambling through video games popular with children and teenagers.
According to the lawsuit, Valve’s games — including Counter-Strike 2, Team Fortress 2 and Dota 2 — enable gambling by enticing users to pay for the chance to win rare virtual items of significant monetary value.
An investigation by the Office of the Attorney General found that in Valve’s most popular game, the process resembles a slot machine, featuring 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 selling for more than $1 million.
The lawsuit alleges Valve has made billions of dollars by luring users — many of whom are teenagers or younger — to engage in gambling in hopes of winning expensive virtual items they can exchange for money. James is seeking to permanently stop Valve from promoting what she described as illegal gambling and to require the company to pay disgorgement and fines.
“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.”
Valve develops, publishes and distributes video games and operates the Steam platform, which allows users to download its games. The lawsuit alleges Valve enables gambling by charging users to open virtual containers known as “loot boxes” for a chance to win rare items.
The virtual items, such as character hats or weapon “skins,” are cosmetic. Like slot machines, the prizes are determined randomly based on odds set by Valve. The company allegedly makes some items harder to win, increasing their value. Though the items have no in-game functionality, the rarest have sold online for thousands of dollars.
In March 2025, it was reported that the market for Counter-Strike skins had surpassed $4.3 billion. An image released with the announcement showed an AK-47 Counter-Strike skin that reportedly sold for more than $1 million in June 2024.
Valve allows users to sell virtual items through the Steam Community Market in exchange for credits that can be used to purchase other games, hardware or virtual items. Users can also connect their accounts to third-party marketplaces to sell items directly for cash. The attorney general’s office said its investigation found Valve facilitates and assists these third-party marketplaces.
The complaint states that the high value of rare skins and the ability to liquidate them have made virtual items targets for theft. Valve has received hundreds of thousands of support requests from users reporting hacked accounts or fraudulent transfers of items, according to the lawsuit.
James asserted that loot boxes can be especially harmful to children, who may be enticed to gamble in hopes of improving their status in virtual worlds. Research shows that children introduced to gambling are four times more likely to develop gambling problems later in life than those who are not, according to the attorney general’s office.
The lawsuit also notes that although the case concerns alleged illegal gambling, Valve’s promotion of games that glorify violence and guns contributes to what James described as a dangerous epidemic of gun violence, particularly among young gamers.
In the complaint filed Wednesday, James seeks to permanently halt Valve’s gambling features, require disgorgement of ill-gotten gains and impose fines for alleged violations of New York law.
The lawsuit is part of broader efforts by James to address online harms and illegal gambling. Earlier this month, she warned New Yorkers about risks posed by sports betting and prediction markets ahead of the Super Bowl. In February, she and a bipartisan coalition of 39 attorneys general called on Congress to pass the Senate version of the Kids Online Safety Act. In 2024, James championed New York’s SAFE for Kids Act to restrict addictive social media feeds for users under 18. She is also leading bipartisan coalitions in lawsuits against Meta and TikTok over alleged harms to young people’s mental health. Last year, her office stopped 26 online casinos masquerading as legal sweepstakes from operating in New York.
The case is being handled by Assistant Attorneys General Marc Montgomery and Alexandra Hiatt 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, part of the Division of Economic Justice.
This article was prepared with the assistance of AI tools under the direction and editing of Robert Cox.