Valve comes out swinging against New York lawsuit with rare public statement: 'The type of deal that would satisfy the NYAG would have been bad for users and other game developers'

Two weeks after the state of New York sued Valve for "letting children and adults illegally gamble," Valve has fired back with a defense of its practices, saying it doesn't believe the containers in its games constitute gambling under the state's laws and expressing disappointment that the attorney general's office would opt to pursue the case despite Valve's efforts "to educate them about our virtual items and mystery boxes."

The New York attorney general's office reached out about its concerns in early 2023, Valve said in its lengthy rebuttal, at which point the company told the AG that loot boxes "are widely used, not just in videogames but in the tangible world as well," comparing them to things like baseball cards, "which generations have grown up opening," as well as Pokémon, Magic: The Gathering, and Labubu. It also points out that because all of the items in Valve's loot boxes are purely cosmetic, players aren't actually incentivized to open them: "there is no disadvantage to a player not spending money."

Valve says that while it doesn't believe its loot boxes constitute a form of gambling under NY law, it made the AG's office aware of its efforts over the years to crack down on the forms of gambling that have taken place outside of Steam using Valve's in-game items, something it very specifically noted is "in violation of the Steam Subscriber Agreement."

"We also shared with them our efforts to combat fraud and theft of users’ items and our extraordinary measures to stop gambling sites from taking advantage of Steam accounts and Valve game items," Valve wrote. "Valve does not cooperate with gambling sites. To date we've locked over one million Steam accounts that were being misused by third parties in connection with gambling, fraud, and theft.

"We’ve also shipped features (like trade reversal and trade cooldown) to discourage gambling sites’ ability to operate and protect Steam users from fraud. And we forbid any gambling-related business to participate in or sponsor tournaments for our games."

It's a very broad defense of Steam that goes beyond New York's specific allegations about illegal gambling enabled by loot boxes. Saying it's locked over one million accounts for "gambling, fraud, and theft" casts a very wide net: Does that number include hacked or stolen accounts, for instance, or those who have taken part in trade scams? As some of my PC Gamer colleagues pointed out, a million Steam accounts locked over whatever unspecified period Valve is talking about also seems like a relatively small slice of the overall pie—although in raw numbers, a million accounts taking part in gambling, fraud, and theft is also a lot, and could be taken to suggest that yeah, maybe there's a real problem here.

The baseball card comparison, which comes up a few times in Valve's statement, is also interesting. It's one I've made myself a few times in the past, and I stand by it to an extent, although it's flawed: The physicality of collectible cards is an inherently limiting factor that digital items, which are always immediately accessible through whatever screen you have at hand, aren't constrained by; and as at least one consumer action has stated in the past, the process of opening a loot box is designed to resemble a slot machine, whereas opening a pack of baseball cards, well—you don't even get the crappy piece of rock-hard gum in the anymore, do you?

Anyway, with that defense in place, Valve went on the offensive, suggesting that changes to Steam proposed by the New York AG's office, such as the eliminating the ability to trade or sell digital items, would undermine the consumer rights of Steam users: "Transferability is a right we believe should not be taken away, and we refuse to do that."

Leaning into growing concerns about government-mandated privacy intrusions in the name of protecting children, Valve also warned that, in its view, the state wants to gather additional information about Steam users including location and age data, "even though most payment methods used by New York Steam users already have age verification built in." That would presumably reflect the requirements of New York's gambling laws: Sports betting is legal in the state, for instance, but New York requires both age verification and geolocation data, to ensure you're actually in the state, before wagers can actually be placed.

Valve's statement also implies quite strongly that it considers the New York AG's action entirely wrongheaded, because it bypasses conventional legislative tools.

"We will of course comply if the New York legislature passes laws governing mystery boxes—something it has not done despite considering the issue a few times," Valve wrote. "Such laws would be the result of a public process, presumably with input from the industry and New York gamers. The type of commitments the NYAG demanded from Valve went far beyond what existing New York law requires and even beyond New York itself.

"It may have been easier and cheaper for Valve to make a deal with the NYAG, but we believed the type of deal that would satisfy the NYAG would have been bad for users and other game developers, and impacted our ability to innovate in game design."

That implication that the state may have offered Valve a settlement of some sort, without actually coming out and stating that it did, is notable: Valve presents itself as the reasonable party here, open to compromise but unwilling to undermine its bedrock principles, while New York is painted as out-of-touch and indifferent. It's a point reinforced in a penultimate aside, calling out the state's claims about the impact of violent videogames on children: "Those extraneous comments are a distraction and a mischaracterization we’ve all heard before. Numerous studies throughout the years have concluded there is no link between media (movies, TV, books, comics, music, and games) and real world violence. Indeed, many studies highlight the beneficial impact of games to users."

It's a big, sweeping defense that seems to be about Valve's practices in general as much as New York's specific allegations about loot boxes and gambling, and it's particularly notable for the fact that Valve generally doesn't make this sort of public statement at all: It's far more typical that it says nothing and lets the lawyers work.

But Valve is also faced with increasing pressure, which may have prompted it to be more publicly forthcoming than it has in the past. A consumer class-action lawsuit was filed against it earlier this week, for instance, and unrelated to loot boxes, it's facing a nearly billion-dollar lawsuit in the UK over claims that it abuses its "dominant market position" to overcharge gamers.

Stricter age verification requirement and outright bans, as Valve referenced in its statement, are coming into play in countries around the world—Discord currently has a global age verification system slated to come online in the second half of 2026— and that threatens to complicate its wildly profitable skins marketplace (one YouTuber's recent napkin math estimated Valve earning $1 billion from CS2 case openings alone in 2025). The world is changing, and after decades of monolithic behavior, Valve may finally be starting to feel that it has to change along with it.