Valve compares its loot boxes to Labubus in lawsuit defense

Last month, the New York Attorney General (NYAG) brought a lawsuit against Valve accusing the company of promoting “illegal gambling” through its randomized in-game loot boxes. On Wednesday, Valve issued its first public comment on the case, comparing its digital loot boxes to randomized real-world purchases like blind-bagged toys or packs of trading cards.

“Generations have grown up opening baseball card packs and blind boxes and bags, and then trading and selling the items they receive,” Valve wrote. “On the physical side, popular products used in this way include baseball cards, Pokemon, Magic the Gathering, and Labubu.”

Though that may seem like an apt comparison on the surface, Valve’s loot boxes differ from these real-world examples in large part because of Valve’s control of the Steam Marketplace, which serves as the only legitimate way to exchange or resell those items. While owners of real-world items are free to trade or sell them however they want, Valve has cracked down on many third-party sites that enable the exchange of in-game items—especially when those items are used as glorified chips for gambling games.

Lawyers told Ars last month that Valve’s control of that marketplace—and its 15 percent commission on item resale—helps establish the inherent economic value of the randomized items it sells, both to players and to Valve itself. That could be a crucial legal element in a courtroom in turning a mere “random purchase” into legally defined “gambling.”

Valve said point-blank that transferability of in-game items “is a right we believe should not be taken away, and we refuse to do that” despite the NYAG’s request. Valve also said it has worries about an NYAG proposal that would require Valve to collect “additional information” from players “on the off-chance someone in New York was anonymizing their location to appear outside of New York, such as by using a VPN.” Such processes, and others to further establish that children were not reselling items, would be an “invasive” violation for every Steam user, Valve wrote.

Valve said it has been “working to educate” the NYAG’s office on loot boxes since they first reached out on the matter in 2023. And while Valve said it would respect any state law that explicitly outlawed randomized loot boxes in games, the NYAG’s lawsuit “went far beyond what existing New York law requires and even beyond New York itself.” Thus, even though it might be easier for Valve to just settle the case, such an outcome “would have been bad for users and other game developers, and impacted our ability to innovate in game design.”

Outside of the New York case, law firm Hagens Berman is preparing a proposed class-action lawsuit in Washington state accusing Valve of “extract[ing] money from consumers, including children, through deceptive, casino-style psychological tactics.” That lawsuit’s arguments focus heavily on Valve’s alleged use of “psychological triggers” like “unpredictable reward schedules, sensory design, near-miss illusions, chasing losses and around-the-clock availability” to form an addictive gambling loop.