Valve has publicly responded to a lawsuit filed by New York Attorney General Letitia James, which accuses the company of promoting illegal gambling through loot boxes in games like Counter-Strike 2 and Dota 2. Valve argues that its virtual items are akin to tangible collectibles and criticizes the AG’s proposed changes to its games.
Key Takeaways
- Valve disputes the claim that its loot boxes constitute illegal gambling under New York law.
- The company likens its virtual items to baseball cards, Pokémon cards, and Magic: The Gathering cards.
- Valve expresses concerns over the AG’s proposed alterations to game mechanics, particularly regarding item transferability and data collection.
- The company states it will comply with any new laws passed by the New York legislature regarding mystery boxes.
Valve’s Defense Against Gambling Accusations
In a rare public statement, Valve addressed the lawsuit initiated by New York Attorney General Letitia James. The AG’s office alleged that loot boxes in games such as Counter-Strike 2, Dota 2, and Team Fortress 2 are a form of “quintessential gambling” that targets children and adolescents. Valve, however, maintains that its loot boxes do not violate New York’s gambling laws. The company stated it had been working to educate the AG’s office about its virtual items since early 2023.
Comparison to Tangible Collectibles
Valve’s core argument is that its virtual items are comparable to physical collectibles that have existed for generations. The company cited baseball card packs, Pokémon cards, Magic: The Gathering cards, and even blind-boxed toys like Labubu as examples of similar products. Valve emphasized that players are not required to open loot boxes to enjoy its games and that the items are purely cosmetic, offering no gameplay advantage.
Concerns Over Proposed Changes
The company voiced significant concerns regarding the alterations the New York Attorney General’s office is seeking. Specifically, Valve objects to the proposal that loot boxes and their contents should not be transferable. Valve believes that the ability to trade or sell digital items is beneficial for consumers, mirroring the practice of trading physical collectibles. Furthermore, Valve expressed apprehension about the AG’s demand for more invasive data collection and age verification measures for all users worldwide, citing privacy concerns.
Compliance and Future Outlook
Valve stated that while it respects New York’s right to legislate, it will comply with any laws the New York legislature enacts concerning mystery boxes. However, the company noted that no such laws currently exist. Valve also highlighted its efforts to combat fraud and shut down accounts involved in using game items for gambling, reporting over one million accounts locked for such activities. The company concluded that the matter will ultimately be decided in court.
Below is the full response…
Dear New York customers of Counter-Strike 2, Dota 2, and Team Fortress 2:
You may have seen the New York Attorney General recently filed a lawsuit against Valve claiming mystery boxes (like crates, cases, and chests) in some of our games violate New York gambling laws. We don’t believe that they do, and were disappointed to see the NYAG make that claim after working to educate them about our virtual items and mystery boxes since they first reached out to us in early 2023. We rarely talk about litigation, but we felt we should explain the situation to you.
We shared with the NYAG that these types of boxes in our games are widely used, not just in video games but in the tangible world as well, where generations have grown up opening baseball card packs and blind boxes and bags, and then trading and selling the items they receive. On the physical side, popular products used in this way include baseball cards, Pokemon, Magic the Gathering, and Labubu. In the game space, digital packs similar to our boxes date back to 2004 and are in widespread use. Players don’t have to open mystery boxes to play Valve games. In fact, most of you don’t open any boxes at all and just play the games—because the items in the boxes are purely cosmetic, there is no disadvantage to a player not spending money.
In the process of cooperating with the NYAG’s investigation, we shared with them our efforts over many years to shut down accounts found to be using Valve game items on gambling sites in violation of the Steam Subscriber Agreement. We also shared with them our efforts to combat fraud and theft of users’ items and our extraordinary measures to stop gambling sites from taking advantage of Steam accounts and Valve game items. Valve does not cooperate with gambling sites. To date we’ve locked over one million Steam accounts that were being misused by third parties in connection with gambling, fraud, and theft. We’ve also shipped features (like trade reversal and trade cooldown) to discourage gambling sites’ ability to operate and protect Steam users from fraud. And we forbid any gambling-related business to participate in or sponsor tournaments for our games.
We have serious concerns with many of the alterations the NYAG claims are necessary to make to our games. First, the NYAG seems to believe boxes and their contents should not be transferable. They appear to assume digital mystery boxes and items in our games are different from tangible items like baseball card packs (which contain random cards), and to take issue with the fact that users have the ability to transfer the items they receive through Steam Trading or user-to-user sales on the Community Market. We think the transferability of a digital game item is good for consumers—it gives a user the ability to sell or trade an old or unwanted item for something else, in the same way an owner can sell or trade a tangible item like a Pokemon or baseball card. NYAG proposes to take away users’ ability to transfer their digital items from Valve games. Transferability is a right we believe should not be taken away, and we refuse to do that.
The NYAG also proposed to gather additional information (beyond what we normally collect in the course of processing payments) about each game user on the off-chance someone in New York was anonymizing their location to appear outside of New York, such as by using a VPN. This would have involved implementing invasive technologies for every user worldwide. Similarly, the NYAG demanded that Valve collect more personal data about our users to do additional age verification—even though most payment methods used by New York Steam users already have age verification built-in. Valve knows our users care about the security of their personal information, and we believe it’s in our and their interest to only collect the information necessary to operate the business and comply with law.
We respect New York’s right to determine the laws governing behavior in the state. We will of course comply if the New York legislature passes laws governing mystery boxes—something it has not done despite considering the issue a few times. Such laws would be the result of a public process, presumably with input from the industry and New York gamers. The type of commitments the NYAG demanded from Valve went far beyond what existing New York law requires and even beyond New York itself. It may have been easier and cheaper for Valve to make a deal with the NYAG, but we believed the type of deal that would satisfy the NYAG would have been bad for users and other game developers, and impacted our ability to innovate in game design.
In addition, although this case is about mystery boxes, we feel the need to address comments made by the NYAG about games, real world violence, and children. Those extraneous comments are a distraction and a mischaracterization we’ve all heard before. Numerous studies throughout the years have concluded there is no link between media (movies, TV, books, comics, music, and games) and real world violence. Indeed, many studies highlight the beneficial impact of games to users.
Ultimately, a court will decide whose position—ours or NYAG’s—is correct. In the meantime, we wanted to make sure you were aware of the potential impact to users in New York and elsewhere.
