New York State Attorney General Letitia James filed a lawsuit in February 2026 against Valve, the corporation that owns the shooter Counter‑Strike 2 and the largest gaming platform, Steam. The reason was the mechanic of so‑called loot boxes, or cases, which the Attorney General’s office contends amounts to a form of illegal gambling. The demands include full refunds for affected state residents and a large penalty in favor of the budget.
What’s inside a case and why lawyers care
The system is straightforward. A player buys a digital key for $2.49, opens a virtual case, and receives a random cosmetic item—a so‑called weapon skin. Skins don’t affect gameplay at all: they’re purely visual decoration.
The overwhelming majority of dropped items cost only a few cents. However, rare ones are valued at hundreds and thousands of dollars, and one skin, according to publicly available sources, was sold for more than $1 million in June 2024. It is precisely this spread in value that turned cases from harmless fun into the focus of prosecutors.
“Billions from illegal gambling”
Letitia James did not soften her wording. “Valve made billions of dollars by letting children and adults illegally gamble on the chance to win valuable virtual prizes. These mechanisms are addictive, cause harm, and violate the law,” her statement says. The lawsuit’s legal theory rests on one thesis: paying for a chance at a random outcome with real‑world market value is treated as gambling under New York State law.
When a New York resident places a sports bet, they go through age verification, face access restrictions, and pay taxes. To buy a Counter‑Strike case key, none of the above is required.
A giant legal betting market right next door
The contrast with the state’s legal gambling business looks especially striking. In January 2026, online sports betting alone in New York generated about $2.4 billion in handle. DraftKings and FanDuel are widely advertised in sports broadcasts watched by both children and adults. Slot machines operate in licensed casinos, and lottery tickets are sold in local convenience stores.
The state taxes gross gaming revenue at a 51% rate, the highest in the country, which brought the budget over $1 billion in 2024. New York gets nothing from loot boxes. Critics say that contrast is the lawsuit’s real motive.
Treble penalties and a refund puzzle
The Attorney General’s office is seeking so‑called full restitution for all New York residents who have ever bought loot boxes, regardless of age. In addition, it has demanded a penalty equal to three times Valve’s profits associated with this mechanic.
Calculating the total refunds would be extremely difficult. Skin prices are volatile and depend on several factors:
- the item’s rarity and its visual characteristics;
- updates to the game itself that change balance and weapon demand;
- community sentiment and speculative demand.
The overall value of the skins market was estimated at about $6 billion in early 2025, but then Valve itself changed its trading rules, which noticeably reduced the market’s volume. Determining each individual user’s “damages” will be a serious legal and technical task. By rough estimates, the demand for treble recovery of “gains” starting in 2014 may exceed $150 million.
A precedent for pressure on prediction markets
Shortly before filing the lawsuit, James issued a warning to state residents, urging them to be wary of prediction platforms such as Kalshi and Polymarket, calling their products “bets disguised as event contracts.” These venues are regulated at the federal level by the Commodity Futures Trading Commission (CFTC), but don’t pay state gambling taxes. A win against Valve could set a precedent for similar pressure on other segments that resemble gambling but have not yet fallen into the state’s tax net.
European experience without million‑dollar penalties
Other countries have already developed their own approaches to loot boxes. Belgium and the Netherlands have completely banned this mechanic. France and Germany took a softer approach, requiring developers to disclose the contents of cases before purchase and to abandon from slot‑machine‑style animations. In none of these cases did the authorities demand mass refunds to all buyers for years of the system’s operation.
In general, the ban on loot boxes is linked to the fact that they are seen as a stepping stone to gambling. There are studies showing that teenagers who actively used loot boxes often began playing online casinos as soon as they reached legal adulthood. This is all the more dangerous because Counter‑Strike 2 is popular not only in the United States, but also in Canada, in Mexico, in Australia, and other countries.
Loot boxes form in players a habit of random rewards, which makes the transition to gambling much easier. This fact is supported by a number of studies involving video game enthusiasts from Canada, Australia, the United States, Mexico, and other countries.
There is an opinion that many of those who tried loot boxes in video games may start playing online casinos in the future. For comments on this, we contacted the authors of several review sites. Among others, experts who compiled a ranking of free cash bonuses no deposit casino canada responded to us. As they noted, gambling with so‑called “free” money forms a dangerous notion of the similarity between gambling and video games, where in‑game currency is used. Often, even after topping up a deposit, the attitude toward the game remains casual. It’s similar to how a player first makes purchases in Counter‑Strike 2 with in‑game currency and then buys loot boxes with real money.
A dispute over motives and the future of digital markets
New York State is unquestionably entitled to determine what counts as gambling within its borders. However, two sharply opposed interpretations have already formed around the lawsuit. Some see it as a sincere attempt to protect consumers from addictive mechanics. Others primarily see a fiscal motive: a desire to tax or fine any digital activity that resembles gambling. The outcome of the case could set the tone for regulating innovative markets in which millions of users have already grown accustomed to participating freely.
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