In the year 2026, the right to ownership is slowly fading as corporations have seen profits surge by offering subscription-based products and services.[1] This is especially prominent in the gaming industry, as most video games today are no longer one-time purchases. Indeed, many of these games are now offered for free and generate revenue through microtransactions, primarily centered around in-game cosmetics.[2] However, many video games under this model do not sell their in-game cosmetics directly to the consumer. Rather, these items are often provided at random through what are called “loot boxes.”[3]
This model has proven immensely successful—in 2018, transactions surrounding loot boxes alone generated up to $30 billion.[4] Washington-based video game developer Valve Corp. has relied on this model extensively in its games Counter-Strike: Global Offensive (“CSGO”), Counter-Strike 2 (“CS2”), Dota 2, and Team Fortress 2.[5] However, with Valve, the process does not end here, as users can sell their cosmetic items for real money, with rare items costing hundreds or even thousands of dollars.[6]
Despite this practice existing since 2013, following CSGO’s “Arms Update,” the New York Attorney General initiated a lawsuit against Valve on February 25, 2026.[7] The NY Attorney General claims that Valve’s loot box practice promotes illegal gambling to children by enticing them to pay for chances to win virtual items that occasionally hold significant monetary value.[8] In the wake of the NY Attorney General’s suit, two class actions raising similar claims have been filed against Valve in the state of Washington.[9]
Overall, the classes allege that Valve dominates the PC gaming industry, controlling “74% of the market share for PC game distribution.”[10] Valve’s CS2 is its most popular game, with an estimated 24 million active monthly users in mid-2025 and 1 million concurrent users.[11] Similarly, Dota 2 and Team Fortress 2 draw substantial player counts, with Dota 2 pulling in about 700,000 monthly users and Team Fortress 2 tens of thousands of monthly users.[12] Each of these games are free to play, leading Valve to rely on the loot box model to generate revenue through the sale of virtual items (“skins”).[13] Indeed, with Valve especially, this practice mirrors playing slot machines. Players must play the video game to obtain loot boxes, which can be opened with keys priced at $2.49, yielding skins that are mostly common.[14]
Before Valve’s “Arms Update” in 2013, it sold these skins directly to consumers, giving players more agency on which items they could purchase.[15] Presently, this practice still exists, but no longer at market value. Instead, players are now forced to pay resale prices for the specific skins they desire by purchasing them on Steam’s Community Marketplace, which is operated by Valve.[16] Currently, the CS2 market alone is valued at $4.3 billion, and Valve takes a 15% commission on each transaction.[17] However, selling skins on the Steam marketplace does not convert directly to real cash. Rather, users must use their Steam wallets, which means their profits must be spent on Steam-sold items like video games, hardware, or more keys to open loot boxes.[18] This does not necessarily prevent players from earning cash, as they will often purchase Steam’s physical items to resell or utilize third-party markets.[19]
In both class action suits, the plaintiffs allege that opening one of Valve’s loot boxes is equivalent to using a slot machine because of the loot box’s accompanying animation, unpredictable reward schedules, slot machine sensory design, near-miss illusions, chasing losses, and around-the-clock availability.[20] Indeed, according to the plaintiffs, users “buy and open loot boxes for the same reason people play slot machines—the hope of a valuable payout.”[21] This is especially concerning, considering that minors “comprise a significant segment of Valve’s users”.[22] Indeed, large-scale survey evidence shows that adult gamers alone are more likely to develop problematic gambling practices by playing video games utilizing this loot box model.[23] This correlation is even more stark among individuals in middle to late adolescence, suggesting that “loot boxes either cause problem gambling among older adolescents, allow game companies to profit from adolescents with gambling problems for massive monetary rewards, or both of the above.”[24] Yet, the plaintiffs do not believe this was a mere coincidence, but rather allege that Valve’s conduct has been deliberate as the company “went so far as to hire an internationally renowned economist to help it develop currencies and cross-platform economies.”[25] Overall, the two classes believe Valve’s fault derives from its choice to “profit from a gambling system it knows children use, while doing nothing to protect them from it.”[26]
Each of the class actions brings claims against Valve under Washington’s recovery of money lost at gambling and Washington’s Consumer Protection Act (“CPA”), which outlaws unfair or deceptive business practices.[27] Under RCW 4.24.070, all persons losing money or anything of value at or on illegal gambling games shall have a cause of action to recover from the dealer or player winning, or from the proprietor for whose benefit such game was played or dealt, the amount of the money or the value of the thing so lost.[28] Therefore, to prevail, Valve’s loot box practice must be adequately construed as illegal gambling. Here, plaintiffs need to show that the loot boxes and keys were a thing of value, which could then provide plaintiffs with a thing of value by participating in a game unaffected by control or influence.[29] Thus, if the proprietor benefits from the illegal gambling practice, plaintiffs are then entitled to the value of the thing lost, or potentially three times that amount under Washington’s CPA.[30] However, there is no requirement that the proprietor offers the chance to win actual money, only that thing of value was exchanged or worth real currency. For example, in Kater v. Churchill Downs, the plaintiff survived early dismissal despite the in-game currency being free and obtainable by waiting for certain periods of time, because the in-game currency was necessary to “have the privilege of playing the game.”[31]
This is not the first time a video game company has been alleged to engage in illegal gambling practices, as Clash Royale has already prevailed in a similar lawsuit.[32] However, even beyond academia and empirical research, there appears to be a growing consensus that the loot box model is synonymous with casino-style practices. [33] This is especially concerning as gambling becomes increasingly normalized in mainstream culture, making the consequences of developing problem gambling during adolescence exponentially more severe.[34] As such, it may be prudent to examine the regulatory efforts of countries such as Germany, China, Belgium, and the Netherlands—each of which has implemented various forms of restrictions surrounding the use of loot boxes in video games—as a potential framework for legislative action in the United States.[35] Indeed, the NY Attorney General’s support is significant, raising the question of how the video game industry could be impacted if NY and the class actions succeed.
[1] Dylan Walsh, Why Subscription Services Can Yield the Most Profits for Companies, UC Berkley Haas News (Nov. 8, 2022), https://newsroom.haas.berkeley.edu/research/why-subscription-services-can-yield-the-most-profits-for-companies/.
[2] Jason W. Osborne, How Loot Boxes in Children’s Video Games Encourage Gambling, Forbes (May 25, 2023, 9:24 AM), https://www.forbes.com/sites/jasonwosborne/2023/05/25/how-loot-boxes-in-childrens-video-games-encourage-gambling/.
[3] Id.
[4] Id.
[5] Ben Adlin, Valve Faces ‘Loot Box’ Gambling Suits After NY AG’s Action, Law360 (Mar. 12, 2026, 10:57 PM EDT), https://www.law360.com/media/articles/2451912/valve-faces-loot-box-gambling-suits-after-ny-ag-s-action.
[6] Id.
[7] The Arms Deal Update, Counter-Strike: Global Offensive, https://www.counter-strike.net/armsdeal (last visited Mar. 29, 2026); Evan Lahti, CS:GO Update Log: Every Recent CS:GO Patch, PC Gamer (Nov. 18, 2019), https://www.pcgamer.com/csgo-update/; Katryna Perera, Valve Promotes Illegal Gambling in Its Games, NY AG Claims, Law360 (Feb. 25, 2026, 9:06 PM EST), https://www.law360.com/articles/2446094.
[8] Compl. at 39-46, People v. Valve Corp., No. IAS Part (N.Y. Sup. Ct. Feb. 25, 2026).
[9] Compl., Matamoros v. Valve Corp., No. 2:26-cv-00812 (W.D. Wash. Mar. 11, 2026); Compl. at 1, Flauto v. Valve Corp., No. 2:26-cv-00788 (W.D. Wash. Mar. 9, 2026).
[10] Flauto, supra note 9, at 4.
[11] Id.; Counter-Strike 2 Steam Charts, SteamDB, https://steamdb.info/app/730/charts/ (last visited Mar. 29, 2026).
[12] SteamDB, supra note 11; Dota 2 Steam Charts, SteamDB, https://steamdb.info/app/570/charts/ (last visited Apr. 2, 2026); Team Fortress 2 Steam Charts, SteamDB, https://steamdb.info/app/440/charts/ (last visited Apr. 2, 2026).
[13] Flauto, supra note 9, at 11.
[14] Id. at 6, 12.
[15] Lahti, supra note 7; The Arms Deal Update, supra note 7.
[16] Flauto, supra note 9, at 22; Steam Community Market: Counter-Strike 2, Valve Corp., https://steamcommunity.com/market/search?appid=730#p5_popular_desc (last visited Mar. 29, 2026).
[17] Cecilia D’Anastasio, Market for ‘Counter-Strike 2’ Digital Items Hits All-Time High, Bloomberg (Mar. 7, 2025), https://www.bloomberg.com/news/articles/2025-03-07/market-for-counter-strike-2-digital-items-hits-all-time-high.
[18] Flauto, supra note 9, at 19.
[19] Id. at 18-21.
[20] Id. at 21-22.
[21] Id. at 5.
[22] People, supra note 8, at 45-46.
[23] David Zendle & Paul Cairns, Video Game Loot Boxes Are Linked to Problem Gambling: Results of a Large-Scale Survey, PLOS ONE (Nov. 21, 2018), https://doi.org/10.1371/journal.pone.0206767.
[24] David Zendle et al., Adolescents and Loot Boxes: Links with Problem Gambling and Motivations for Purchase, 6 Royal Soc’y Open Sci. 190049 (2019), https://doi.org/10.1098/rsos.190049.
[25] Matamoros, supra note 9, at 6.
[26] Flauto, supra note 9, at 25.
[27] Wash. Rev. Code Ann. § 4.24.070; RCW 19.86.
[28] Wash. Rev. Code Ann. § 4.24.070
[29] Kater v. Churchill Downs Inc., 886 F.3d 784, 786 (9th Cir. 2018); Wash. Rev. Code § 9.46.0237; see State ex rel. Evans v. Bhd. of Friends, 247 P.2d 787, 797 (1952); Wash. Rev. Code § 9.46.0285.
[30] Kater, 886 F.3d at 786.
[31] Id.; Wash. Rev. Code § 9.46.0285.
[32] Dan McGinn, New York Targets Valve’s Loot Boxes as Illegal Gambling, Nat’l L. Rev. (Feb. 27, 2026), https://natlawreview.com/article/new-york-targets-valves-loot-boxes-illegal-gambling; Gina Kim, Game Over for ‘Loot Box’ Gambling Suit Against Supercell, Law360 (Jan. 4, 2023, 6:25 PM EST), https://www.law360.com/articles/1562283.
[33] Leon Y. Xiao, Loot Box State of Play 2024: Another Trip Around the World of Regulation, GamesIndustry.biz (Dec. 17, 2024), https://www.gamesindustry.biz/loot-box-state-of-play-2024-another-trip-around-the-world-of-regulation; Scott Van Voorhis, The $15 Billion Question: Have Loot Boxes Turned Video Gaming into Gambling?, HBS Working Knowledge (Apr. 21, 2023), https://www.library.hbs.edu/working-knowledge/the-15-billion-question-have-loot-boxes-turned-video-gaming-into-gambling.
[34] Zendle et al., supra note 24; Teens Gambling: It’s a Risk, Mass.gov, https://www.mass.gov/info-details/teens-gambling-its-a-risk (last visited Apr. 2, 2026).
[35] Zendle et al., supra note 24.