New York sues Counter-Strike game developer saying 'loot boxes' promote gambling

NEW YORK (AP) — New York's attorney general has sued video game developer Valve, claiming the “loot boxes” found in Counter-Strike and other popular video game franchises illegally promote gambling.

State Attorney General Letitia James said in a lawsuit filed Wednesday in New York state court that games such as Counter-Strike 2, Team Fortress 2 and Dota 2 illegally charge users for the chance to win rare items held in the virtual containers.

In Counter-Strike, the process even resembles a slot machine, with an animated spinning wheel that eventually rests on a selected item, James’ office said.

“Valve has made billions of dollars by letting children and adults alike illegally gamble for the chance to win valuable virtual prizes,” James said in a statement. “These features are addictive, harmful, and illegal.”

Messages seeking comment were left Wednesday for the Bellevue, Washington-based company.

“Loot box” items are generally cosmetic, such as a hat for a player’s character or an artistic skin for weapons. They usually don't serve any vital function in the games, but James' office said the items can still be sold online for significant sums.

Some of the rarest items can go for thousands of dollars online, according to James' office. One item, an AK-47 Counter-Strike skin, recently sold for more than $1 million.

James' suit says Valve is violating New York’s constitution by promoting gambling in its games. It wants the company to stop the practice and pay restitution and damages to users, as well as a fine worth three times the amount of its profits from the features.

The attorney general argues that research has found children introduced to gambling are four times more likely to develop a gambling problem later in life than those who are not.

“Loot boxes, like other forms of gambling, can lead to addiction and result in real harm,” the suit reads. “But Valve’s loot boxes are particularly pernicious because they are popular among children and adolescents, who are lured into opening loot boxes by the prospect of winning expensive virtual items that convey status in the gaming world.”

James' office said demand for “loot box” prizes has drawn interest not just from online speculators and investors that have helped values soar, but also thieves targeting third-party, online marketplaces where the virtual items can be sold for cash.

Valve facilitates those third-party marketplaces, as well as operating its own, the Steam Community Market, where players can sell their items and use the proceeds to buy other video games, gaming hardware or other virtual items.