CS2 Loot Box Lawsuit: NY AG Case and Valve’s Defense

Valve is facing two active U.S. lawsuits claiming that the paid loot boxes in Counter-Strike 2 are illegal gambling. New York Attorney General Letitia James sued the company in state court in February 2026, and a consolidated federal class action is proceeding in the Western District of Washington. Both target the same practice: players pay $2.49 for a key to open a “case” and receive a randomized cosmetic skin whose real-world resale value can range from pennies to over a million dollars. Valve has asked the New York court to throw the case out, calling the gambling comparison “nonsensical.”¹ As of mid-2026, no court has ruled on the merits.

What the Lawsuits Are Actually Challenging

The conduct at issue is Valve’s case-and-key system in Counter-Strike 2, along with the parallel systems in Dota 2 and Team Fortress 2. A player buys a key for $2.49 plus tax, opens a case, and a random-number generator awards one skin. The odds are heavily skewed toward common items worth pennies; rare skins can be worth hundreds or thousands of dollars.²

Skins do nothing in the game itself. They only change how a weapon looks. What gives them real value is that Valve runs the Steam Community Market, where players sell skins for Steam Wallet funds usable on other games and Valve hardware. Third-party marketplaces let users convert skins directly to cash. The New York complaint estimates the Counter-Strike skin market at more than $4.3 billion as of March 2025, and cites a single skin that sold for over $1 million in June 2024.³

The complaint also draws attention to the opening animation, which mimics a spinning wheel that slows near high-value items before landing on the actual reward. James’s office compares this to a slot machine’s “near miss” effect.²

The New York Attorney General’s Case

James filed People of the State of New York v. Valve Corporation, Index No. 450952/2026, on February 25, 2026, in the Supreme Court of the State of New York, New York County.² The complaint calls Valve’s loot box system “quintessential gambling” and describes the company as operating an “online casino.”⁴

The claims rest on three provisions of New York law:

Article I, Section 9 of the New York Constitution, which prohibits lotteries and gambling within the state.
Penal Law §§ 225.05 and 225.10, which criminalize promoting gambling.
Executive Law § 63(12), which lets the attorney general seek injunctions, restitution, damages, and disgorgement against businesses engaged in persistent illegal conduct.

The state’s theory is that players stake real money (the key price) on a contest of pure chance (the random-number generator) to win items of real-world monetary value (because they can be resold). Under that reading, every element of illegal gambling is met.²

The complaint emphasizes harm to children, citing research that children introduced to gambling are four times more likely to develop gambling problems later. It also alleges that high-value skins have made players targets for hacking and fraud, generating hundreds of thousands of support requests.³

New York is asking for a permanent injunction blocking loot box sales in the state, disgorgement of profits, and damages equal to three times Valve’s profits from loot boxes.⁵

Valve’s Defense

Valve’s lawyers at Milbank LLP filed a 42-page motion to dismiss with prejudice on May 18, 2026, before Justice Nancy Bannon.¹ The motion makes several arguments.

There is no “stake” or “risk,” Valve says, because a player who pays $2.49 always gets a skin. “Every player always receives exactly what he paid for,” the filing states.⁶

Skins are also not “something of value” under New York gambling statutes, Valve argues, describing them as items of “subjective and aesthetic value” rather than money, property, or tokens exchangeable for money. The company says the AG’s theory of value requires too many steps: sell a skin for Steam credit, use that credit to buy hardware, then resell the hardware for cash.⁶

The most quoted portion of the filing compares loot boxes to baseball card packs, Labubus, comic book grab bags, and cereal box toys. “People enjoy surprises,” the memorandum states. The filing notes that a single baseball card once sold for $5.2 million without anyone treating card packs as illegal gambling.⁵

Valve also raises a fairness argument. It has sold loot boxes for more than a decade, paid New York sales tax on those transactions, and received no objection from state regulators during that time. The state legislature has repeatedly declined to pass bills banning loot boxes. Letting the attorney general criminalize the practice through litigation, Valve argues, would let the executive branch “criminalize overnight” a “breathtaking amount of commonplace” conduct not specifically banned by statute.¹

The motion is pending before Justice Bannon. No oral argument date has been publicly reported.

The Federal Class Action

Valve is defending a parallel case in federal court. On April 9, 2026, U.S. District Judge John H. Chun consolidated three pending suits into In re Valve Loot Box Litigation, No. 2:26-cv-00788-JHC, in the Western District of Washington, and appointed Hagens Berman as interim lead class counsel.⁷

The individual plaintiffs, identified in earlier filings as Galas and Flauto, bring claims under Washington’s Recovery of Money Lost at Gambling Act and the Washington Consumer Protection Act. Their theory tracks the New York complaint: loot boxes exchange payment for items of varying value based on chance and use slot-machine-style psychological mechanics.⁷

A consolidated complaint was filed May 11, 2026. The proposed class covers anyone who bought keys or loot boxes in Counter-Strike (CS:GO or CS2), Dota 2, or Team Fortress 2, along with parents and guardians of minors who did so. The plaintiffs seek restitution, an end to the loot box model, and age verification and consumer protections. Under the April 9 scheduling order, Valve had 45 days from the filing date to respond, with its response due in late June 2026.⁷

What Could Change for Players

Neither case has produced a ruling on the merits, so nothing has changed yet for players in the United States. If James wins or survives dismissal and later prevails, Valve could be blocked from selling loot boxes to anyone in New York and forced to pay back profits plus treble damages. If the federal class action succeeds, the remedies could reach further: restitution for a nationwide class of buyers, an end to the loot box model, and mandatory age verification.⁷

The New York case will likely hinge on whether Justice Bannon accepts Valve’s argument that skins are not “something of value” under state gambling law. If the motion to dismiss fails, the case moves to discovery, and the complaint already references Valve internal communications suggesting the company knew its items were being bought and sold for real money.⁷

How Valve Has Handled Prior Challenges

This is not the first legal pressure on Valve’s loot box system, though it is the most direct U.S. challenge to date. A 2016 class action, McLeod v. Valve Corp., was dismissed after a federal court found the RICO claims insufficient and the state-law claims below the jurisdictional threshold.⁸ Regulators in Belgium and the Netherlands moved against loot boxes in 2018, and an Austrian court in December 2023 ordered Valve to refund a player about €14,097 after ruling that Counter-Strike cases were illegal gambling under Austrian law.⁹

In September 2025, Valve rolled out a “Genesis Uplink Terminal” in Counter-Strike 2 for players in Belgium, the Netherlands, and France. The feature lets players preview specific items at fixed prices before buying, moving the randomization ahead of the transaction rather than after it.¹⁰ Whether Valve will offer a similar workaround in the United States, or fight the current cases to judgment, is one of the open questions the pending motions will begin to answer.

Separately in New York, State Senator Samra G. Brouk introduced Senate Bill S10091 in April 2026 to bar operators from offering loot boxes and similar microtransactions to minors without age verification, with a companion Assembly bill A10709.¹¹ A broader Assembly bill, A09044, would classify monetizable loot boxes as gambling and impose fines of $10,000 to $100,000 per violation.¹² All three remain in committee.

1
Courthouse News Service. Valve Moves to Dismiss Counter-Strike Gambling Lawsuit in New York
2
New York State Attorney General. New York v. Valve Corporation Complaint
3
New York State Attorney General. Attorney General James Sues Game Developer Promoting Illegal Gambling Through
4
CBS News. New York AG Letitia James Sues Valve Loot Boxes Gambling
5
PC Gamer. Valve Asks New York Court to Dismiss Counter-Strike Lawsuit
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Yahoo Finance. Counter-Strike Maker Says Not
7
Hagens Berman Sobol Shapiro LLP. Valve Loot Box Gambling Class Action
8
Eric Goldman’s Technology & Marketing Law Blog. Federal Court Rejects Online Gambling Lawsuit Against Steam
9
Dexerto. Valve Ordered to Refund $15K to CSGO Player as Cases Ruled Illegal in Austria
10
Qualitative Criminology. From Valve to Soft2Bet: An Investigation Into Loot Boxes, Video Game Compliance, and iGaming Regulation
11
New York State Senate. Protecting Our Kids From Gamification of Gambling Act
12
BillTrack50. New York Assembly Bill A09044