New York Attorney General Letitia James announced Wednesday afternoon that her office has filed a lawsuit on behalf of the state of New York against Valve Corporation, alleging that the creator of Dota 2, Counter-Strike 2, Team Fortress 2, and Deadlock enables “children and adults” to engage in illegal in-game gambling through the use of “lootboxes” for “the chance to win valuable virtual prizes.”
In a 52-page filing, NY AG James is suing Valve under Section 225 of the NYS Penal Code (Penal Law §§ 225.05 and 225.10) and Executive Law § 63(12) for allegedly engaging in illegal in-game gambling and bookmaking that harms children and adults and violates multiple New York laws related to gambling. From the announcement:
“Illegal gambling can be harmful and lead to serious addiction problems, especially for our young people,” said NY Attorney General James. “Valve has made billions of dollars by letting children and adults alike illegally gamble for the chance to win valuable virtual prizes. These features are addictive, harmful, and illegal, and my office is suing to stop Valve’s illegal conduct and protect New Yorkers.”
The New York AG is seeking the following relief from the court, according to the filing:
- a. Permanently enjoining Defendant from violating the Constitution and laws of the state of New York, including Executive Law § 63(12) and Penal Law §§ 225.05 and 225.10;
- b. Directing Defendant to produce an accounting of monies lost by consumers in New York as a result of Defendant’s illegal acts;
- c. Directing Defendant to make full restitution to consumers and pay damages caused, directly or indirectly, by the illegal acts complained of herein plus applicable pre-judgment interest;
- d. Directing Defendant to disgorge all monies resulting from the illegal practices alleged herein;
- e. Directing Defendant to pay a fine of three times the amount of its gain from the illegal practices alleged herein, pursuant to Penal Law § 80.10;
- f. Directing such other equitable relief as may be necessary to redress Defendant’s violations of New York law;
- g. Awarding Plaintiff costs of $2,000 pursuant to CPLR § 8303(a)(6); and
- h. Granting such other and further relief as the Court deems just and proper.
It should be noted that Counter-Strike 2 is rated “Mature” by the ESRB and meant for 17+ audiences, while Dota 2 is rated for “Teen” audiences, Team Fortress 2 is rated “Mature,” and Deadlock is has not been rated by the ESRB but is expected to have a “Teen” or “Mature” rating.
According to the announcement, the lawsuit is being handled by Assistant Attorneys General Marc Montgomery and Alexandra Hiatt and Senior Enforcement Counsel Jordan Adler under the supervision of Bureau Chief Kim Berger and Deputy Bureau Chief Clark Russell, of the Bureau of Internet and Technology. The announcement notes that “the Bureau of Internet and Technology is a part of the Division of Economic Justice, which is led by Chief Deputy Attorney General Chris D’Angelo and overseen by First Deputy Attorney General Jennifer Levy.”
On a related note, attorney and ESG Law partner Harris Peskin offers his expert opinion on what this lawsuit could mean for Valve in this X thread.
Valve has not publicly commented on this story as of this writing, nor has it responded to the lawsuit in court.
This is a developing story…