For years now, Valve fans have been making jokes about the company’s slow transition from game maker to glorified digital hat and knife paint marketplace. This week, though, a lawsuit brought by the state of New York argues that Valve’s in-game loot box sales amount to an illegal gambling outfit worth tens of billions of dollars.
Lawyers who have looked into the particulars of the case tell Ars that the state faces an uphill battle in convincing courts that this portion of Valve’s business legally constitutes gambling. That said, there are a few elements of the case that might make Valve legally vulnerable to the state’s arguments.
What is gambling, anyway?
For a game to legally be counted as “gambling” in most jurisdictions, it has to pass a three-part test: a player has to pay money (1) for an outcome that’s materially determined by chance (2) in the hopes of receiving something of value (3). While buying a key to a loot box in a Valve game easily passes those first two tests, New York’s legal case will likely hinge on whether the random cosmetic items players get from those loot boxes constitute “something of value” for statutory purposes.
Even though loot box purchasers don’t know what item they’ll get, the fact that they know they’re getting something for their money could matter legally. “Gambling traditionally means risking money and possibly getting nothing,” Foundation Law Group Counsel Jonathan Loiterman told Ars. “Here, buyers can’t lose their stake in the traditional gambling sense; they always receive an item. That looks more like buying a randomized product than placing a bet.”
In this way, Valve’s loot boxes are more akin to physical “blind box” toy sales or collectible card packs than a game like blackjack or roulette. In the real world, these kinds of randomized sales “are not considered gambling because the stated value of what you receive is unchanging,” Hoeg Law Firm attorney Richard Hoeg told Ars. “You pay for a pack of cards, you get a pack of cards.”