New York sues video game developer Valve, says its 'loot boxes' are gambling

NEW YORK, Feb 25 (Reuters) - New York's attorney general sued Valve, a video game developer whose franchises include Counter-Strike, Team Fortress and Dota, accusing it of violating state gambling laws and threatening to addict children through its use of "loot boxes."

In a complaint filed in a state court in Manhattan, Attorney General Letitia James said Valve's loot boxes were a game of chance, with valuable items often hard to win and many items often worth pennies, and amounted to "quintessential gambling."

Valve, based in Bellevue, Washington, did not immediately respond to requests for comment.

Loot boxes let players use real money to buy chances to win virtual items such as decorations for characters and weapons, in an effort to convey status.

James said charging New Yorkers tens of millions of dollars for "keys" to open loot boxes advanced Valve's unusual business model of letting players sell items they won on its virtual marketplace, Steam Community Market, or other marketplaces.

She said that in one game, opening a loot box even resembled a virtual slot machine, as a wheel whirred through various items before stopping.

"Valve’s loot boxes are particularly pernicious because they are popular among children and adolescents," the complaint said. "Research has shown that children who are introduced to gambling are at a significantly higher risk of developing gambling addictions later in life."

James accused Valve of violating New York's constitution and penal law by promoting gambling. She is seeking restitution for players plus a fine of three times the company's alleged illegal gains.