Game Blind Box System Sued for Gambling-Related Allegations; Valve Responds by Citing Labubu, Lawyer Clarifies: These Two Are Different Matters

Reprinted from: Yangtze Evening News

At the end of February this year, the well-known American gaming company Valve (commonly known as V社) was sued over its game loot box system suspected of gambling. After remaining silent for several days, on March 10, V社 issued an official response.

According to reports, New York State Attorney General Letitia James accused the company of designing loot box systems in multiple games such as Counter-Strike 2, Team Fortress 2, and Dota 2 that allegedly promote illegal gambling activities. New York State demanded a permanent ban on V社 promoting related gambling features in its games, the recovery of all illegal gains, and fines for violating New York laws. The lawsuit states that V社’s loot box model relies on consumer payments, with the outcome determined by luck, allowing players to randomly obtain valuable virtual items—characteristic of gambling behavior.

In several V社 games, players must spend $2.49 to buy a key to open a loot box, with a chance to receive virtual items. These items can be traded on the Steam Community Market and third-party platforms. Usually, the items inside are worth less than $2.49, but there’s a chance to get rare items worth thousands of dollars.

Currently, V社 faces not only this lawsuit from New York. On March 9, the Hagens Berman law firm, known for class action lawsuits, filed a class action against V社 in the Western District of Washington, accusing its loot box systems in popular games like Counter-Strike 2, Dota 2, and Team Fortress 2 of constituting illegal gambling.

In its response on the 11th, V社 denied involvement in gambling, claiming that its loot box systems are similar to other blind box products like Labo Labo. “We explained to the New York Attorney General’s Office that such in-game loot box mechanisms are widespread, not only in video games but also in the real world. Generations have grown up opening baseball card packs, blind boxes, and trading or reselling items. Real-world products include baseball cards, Pokémon cards, Magic: The Gathering, and Labo Labo blind boxes.”

Paying for a Labo Labo blind box with a chance to get a hidden version, which can be quite valuable on the secondary market, is comparable to buying a key to open a loot box, with a chance to get rare items worth a lot. V社’s explanation seems reasonable, but is it really so? Youteng, an intellectual property lawyer at Shanghai Dabong Law Firm, disagrees and believes V社’s statement has fundamental flaws and is essentially a form of sophistry.

Youteng explains that similarity does not equal legal equivalence. Like betting on football matches versus buying futures, both involve betting on future outcomes, but their legal nature is entirely different. There are also key structural differences between V社’s loot boxes and physical products like Labo Labo. First, the secondary markets for baseball cards, Pokémon cards, and Labo Labo are organically formed, with the issuers not operating official secondary markets or taking commissions. In contrast, V社 is both the issuer of the loot boxes and the operator of the official trading market on Steam Community Market, taking a 15% fee on each secondary transaction. “This means V社 has designed a closed loop: players buy keys, open loot boxes, obtain items, and trade them for profit, with V社 participating in each step. The core argument from the New York Attorney General is that this profit loop turns the loot boxes from consumer products into gambling tools—buying a key to open a loot box is essentially betting chips to win a cashable prize.”

Second, taking Bubble Mart as an example, once Bubble Mart sells a blind box, the ownership rights transfer fully to the consumer. But V社’s players do not truly own the items obtained in the game’s loot boxes. “According to Steam’s End User License Agreement, players only have a license to use within their accounts. V社, as a centralized controller, can ban accounts at any time, modify drop rates, or even make certain items permanently unavailable or change their appearance.”

Third, V社 deliberately designs the presentation of random outcomes to mimic gambling experiences. The opening interface features a spinning wheel that slows down and stops on a specific item, often stopping near high-value items to create the illusion of almost winning. “This is an addictive design developed over decades in the slot machine industry. It’s not just a similar product; it’s a digital replication of gambling mechanisms.”

Meanwhile, trading of Labo Labo blind boxes and collectible cards differs significantly from online game item trading. For example, trading a Labo Labo involves assessing condition, packaging, shipping, and logistics risks, with longer transaction cycles and lower liquidity. They are more like collectibles. In contrast, V社 actively financializes loot box items, which are highly liquid, with instant transactions and real-time price fluctuations similar to stock charts. This can greatly stimulate players’ speculative and gambling tendencies, giving the attributes of financial speculation and betting. “V社’s analogy aims not to prove legality but to create room for negotiation, signaling to regulators and courts: if opening loot boxes is illegal, then opening baseball cards, Pokémon cards, and blind boxes should also be illegal. This is a common tactic in litigation—spreading doubt and muddying the waters to influence regulatory and judicial decisions toward settlement. But a clear flaw in this strategy is that when V社 takes a 15% fee on each transaction, it is no longer just a game developer but a gambling operator. Bubble Mart has never done this. This is the hardest point for V社 to explain in court.”

Yangtze Evening News | Ziniu News Reporter: Shen Zhao

Proofread by: Wang Fei