Loot Boxes in Valve Games Akin to Illegal Gambling, Class Action Lawsuit Claims

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A proposed class action lawsuit alleges that the system of loot boxes found in certain video games  on Valve Corporation’s Steam platform constitutes illegal gambling under Washington state law.

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The 32-page fraud lawsuit explains that three of Valve’s proprietary, free PC video games—Counter-Strike, Team Fortress 2, and Dota 2—use a loot box system, whereby users pay real money to purchase “keys” to open a virtual container and possibly win a decorative virtual item. The class action suit contends that the loot box system mimics casino gambling and lures users into spending more for the “remote but tantalizing” possibility of winning a rare, valuable in-game item.

The suit summarizes that the loot boxes found in Valve’s games “satisfy every element” of the definition of gambling under Washington law, namely in that a user stakes real money (the price of a key) on the outcome of a contest of chance (the random selection of a virtual item) to receive a “thing of value.” More broadly, the filing stresses that loot boxes are a “deliberate, carefully engineered revenue model” for the defendant, which has allegedly sold billions’ worth of loot box keys for Counter-Strike alone.

“Valve has designed every aspect of this system—the randomized distribution, the tiered rarity structure, the slot-machine-style animations, and the integrated marketplace—to maximize the volume of loot box openings and the revenue Valve derives from them,” the class action lawsuit reads.

According to the complaint, loot boxes are “useless” without keys, which must be purchased through Steam for $2.49 in real-world money. The case asserts they are not an “incidental feature” of the games but exist as an intentional design choice, despite being a form of gambling with real and well-documented harms.

The filing states that before a player opens a loot box, they can view a list of items that may be in the box and their rarity (such as an “Exceedingly Rare Special Item!”), but not the corresponding odds of winning them.  Players, the lawsuit explains, have no way of determining what loot they will be awarded or the value of the item they might receive. The suit says that some extremely rare items have an actual cash value of over $10,000, but most loot box awards are worth less than $0.50.

The lawsuit says that although players must pay $2.49 for a loot box key, the “vast majority” of the items inside loot boxes are “common and nearly worthless,” with desirable and rare items only being awarded “a tiny fraction of the time.” Notably, the filing says that the estimated odds of winning one of the most valuable items in a loot box are roughly one in 146,000.

According to the suit, Valve continues to make money when players sell the virtual items they won on the Steam Community Marketplace, where players can buy and sell in-game items with the Steam Wallet, which is funded by the player and has the purchasing power of cash. Valve takes a 15 percent cut of every sale made through the Steam Community Marketplace, further increasing its revenue, the lawsuit says. 

Critically, the case states that virtual items can also be sold for cash directly when players use third-party marketplaces that Valve “knowingly facilitates” by providing player trade codes. Per the case, Valve has expressed that it does not “fundamentally have an opinion on other uses that people have for their inventories.”

Moreover, the lawsuit claims that Valve intentionally designed loot boxes to mimic casino gambling by utilizing common psychological techniques such as unpredictable reward schedules, a spinning display and flashing colors to “mimic the sensory experience” of a slot machine, constant availability, and a wheel that often comes to rest next to a valuable item, giving the illusion of a “near-miss.”

“Players buy and open loot boxes for the same reason people play slot machines—the hope of a valuable payout,” the lawsuit contends.

The connection between loot boxes and gambling problems is “consistent and alarming,” the lawsuit says, citing a case that found that loot boxes have a stronger link to problematic gaming than any other type of in-game purchase.

In addition to “severe” financial consequences, the lawsuit says that gambling disorders are frequently linked to anxiety, depression, insomnia, substance use disorders, and even suicide.

The case elaborates that the link between loot boxes in video games and gambling problems is even stronger and can create detrimental and “life-altering” changes for children and adolescents, who are particularly susceptible because their neurological immaturity is associated with a lack of impulse control and susceptibility to online peer pressure, where “high-risk spending behavior” is normalized and celebrated.

Despite the dangers, Valve does “nothing meaningful” to prevent children from using loot boxes, nor is there any kind of age verification or confirmation of parental consent needed to pay for a loot box key, the case says.

The lawsuit claims that because items awarded from a loot box have an actual and obtainable monetary value, loot boxes function as a form of illegal gambling under Washington state law.

The Valve Corporation class action lawsuit seeks to cover all individuals in the United States who purchased a loot box key or paid to open a loot box in Counter-Strike (including CS:GO and CS 2), Dota 2, or Team Fortress 2, and lost money by receiving a virtual item worth less than the price paid to open the loot box.

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