The computer game company said its virtual items are less like poker chips than baseball cards with “subjective and aesthetic value.”
MANHATTAN (CN) – PC game developer Valve has moved to remove one sweeping lawsuit in which the New York attorney general accuses it of promoting unregulated gambling through its flagship Counter-Strike 2 title.
In one memorandum of 42 pages filed late Monday night, Valve warns that it would be a slippery slope to punish it for so-called “loot boxes” or “cases,” in which players can pay roughly $2.50 to get an in-game item that changes to rarity. If New York deems that gambling illegal, it could say the same for baseball cards, Happy Meal toys, Labubus, comic book clutch bags and more, the developer argues.
“Each of these transactions – and many others like them – involves a purchase of random items that can be resold for cash,” Valve wrote in the filing. “No court has allowed the executive branch to criminalize overnight such breathtakingly “ordinary” conduct not specifically provided for by a statute. This court should not be the first.”
New York Attorney General Letitia James sued Valve in Februaryaccusing the company of making billions by letting “children and adults play illegally for the chance to win virtual prizes” in the form of Counter-Strike weapon skins.
These skins, the state claims, have real-world value, evidenced by the fact that players can sell them on Valve’s virtual marketplace and several third-party sites. Some particularly coveted cosmetics can go for thousands of dollars—a rare AK-47 skin recently sold for $1 million.
However, users are much more likely to unmake ordinary items worth only cents.
James likened the process of unboxing these virtual items to spinning a slot machine with “the potential to win a big prize.” But in its bid to put the matter to rest, Valve dismissed the parallel casino, instead comparing the practice more to mystery packs.
“People enjoy surprises,” the company says. “Part of the appeal of many popular collectibles, from baseball cards to cereal boxes, is the opportunity to open a sealed package and be surprised by a rare item. … No legislator or court has ever considered that act to be illegal gambling.”
Like baseball cards, Valve argues that Counter-Strike skins “are designed for entertainment and have subjective and aesthetic value to the user.” They also have great secondary markets for collectors, with resale prices based on desirability.
Banning Counter-Strike instances would “inject uncertainty into hundreds of daily commercial transactions,” the company warns.
“Can parents buy packs of baseball cards for their children? Can families go to Chuck E. Cheese’s to play games of chance and exchange winning tickets for prizes? Can a child reach into a cereal box and grab a surprise toy? All of these actions and more can lead to felonies punishable under the NYAG’s interpretation of gambling,” Valve argues.
That result would be “nonsensical,” claims the developer. It’s asking a New York judge to dismiss the suit with prejudice, arguing that their virtual events simply don’t constitute gambling under state law. Players get exactly what they pay for, a mystery box weapon skin, according to Valve.
“There is no ‘stake’ or ‘danger,'” he argues.
James’ lawsuit threatens to upend an economy of more than $4 billion worth of Counter-Strike items in the game. She is seeking damages worth three times the amount Valve made from the loot boxes and could prevent the company from selling them to New Yorkers in the future.
Valve has faced similar regulatory scrutiny around the world. Earlier this year, the company was forced to change the way unboxing works for German Counter-Strike players. Now, these players can see what item is inside a box before purchasing a key to unlock it, bringing it into compliance with local gambling regulations.
In the state, however, Valve says it has offered mystery boxes in some games for more than a decade without objections from any state regulators.
“No other state has ever criminalized mystery boxes,” the company argues. “Valve had no reason to believe her conduct was illegal.”
New York Supreme Court Justice Nancy Bannon is presiding over the case. Valve is being represented by global white-shoe firm Milbank LLP.
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