Valve has filed a motion to dismiss the lawsuit brought by New York’s Attorney General Letitia James against the company.
James filed the lawsuit against Valve in February, alleging that Valve’s games promote illegal underage gambling. She likened opening loot boxes to playing a slot machine, with users risking their money for the chance to hit the jackpot and receive a high-value item.
Valve rejects these accusations and likens its loot boxes to baseball cards, arguing that no court has ever deemed them illegal gambling.
“As with baseball cards, collectors have established secondary markets for skins, with resale prices based on desirability,” Valve states in its 42-page motion to dismiss the lawsuit.
People Enjoy Surprises
“People enjoy surprises,” started Valve’s preliminary statement. “Part of the appeal of many popular collectibles, from baseball cards to cereal box prizes, is the possibility of opening a sealed package and being surprised with a rare item.”
It adds that loot boxes “are common features in countless videogames — not just Valve’s — and are enjoyed by millions of people worldwide.”
Electronic Arts faced a lawsuit over loot boxes in its EAFC games, but an Austrian court ruled that this does not mean they should be considered gambling.
Valve wants the New York Supreme Court to reach a similar judgment. It claims that James’ “theory fails right at the gate because Valve’s offering of mystery boxes does not entail any ‘stake or risk’—the defining element of gambling” under New York state law.
Users Get What They Bargained For
All users who open a loot box receive an item, meaning they do not lose in the same way that someone buying a lottery ticket or playing a slot machine can lose their money, argues Valve.
In her lawsuit, James claimed that most items that users receive are practically worthless, and certainly less valuable than the fee they pay to open the box. She argues that players risk their money for the possibility of obtaining a valuable, rare item.
Valve admits that players are seeking those rare, valuable items, but the fact that they get an item means loot boxes cannot be categorized as gambling.
Users “pay a fixed amount of virtual currency to get exactly one skin from a known set of options pursuant to publicly disclosed odds.”
It references other courts that have ruled loot boxes are not gambling, including a case in California against Supercell. In that instance, a judge dismissed a lawsuit against the company that alleged loot boxes in Brawl Stars and Clash Royale games were like slot machines.
When handing down the verdict, the judge ruled that the loot boxes were not gambling as players “received exactly what they expected: at least one mystery virtual item”.
Skins Are Not Things of Value
Valve also claims that skins, which users get from loot boxes, do not fall under the category of “things of value”.
New York’s gambling laws define something of value as “[1] any money or property, [2] any token, object or article exchangeable for money or property, or [3] any form of credit or promise directly or indirectly contemplating transfer of money or property or of any interest therein, or involving extension of a service, entertainment or a privilege of playing at a game or scheme without charge.”
Valve argues that skins do not satisfy this definition as they are neither money nor property as defined by New York’s laws.
It admits that skins can be sold on third-party websites for money, but claims this does not meet the requirement for “exchangeable for money or property”.
“If ‘exchangeable for money or property’ encompassed any item that can theoretically be resold, the definition would have no meaning or limiting principle,” says the company.
Valve Not Responsible For Third-Party Markets
Valve also says that its terms and conditions prohibit the sale of items on external platforms. The company has prohibited event organizers and esports teams from promoting third-party skins gambling and case opening sites.
James recognizes this, but argues it is not restricting third-party marketplaces that allow users to buy and sell items gained from loot boxes.
The company says she “cannot seriously suggest that Valve should be held criminally liable for third-party websites because it failed to shut them down.”
It goes on to argue that skins are also protected expressions of free speech. Skins are “purely aesthetic creations and are thus fully protected by the First Amendment.”
For all those reasons, the company says the lawsuit “should be dismissed in its entirety.” Valve is also facing two more lawsuits over allegations that its loot boxes are gambling. Both have been filed by the same legal firm.