How strong is New York’s “illegal gambling” case against Valve’s loot boxes?

“Calling it gambling because a user could, through several indirect steps, convert an item into cash risks stretching gambling law beyond its traditional limits,” Loiterman said. “If New York’s theory wins, it raises uncomfortable questions about things like Pokémon cards or promotional games (e.g. McDonald’s Monopoly). Courts will be cautious about going that far.”

New York also argues that Valve tacitly endorses third-party services that allow players to easily “cash out” their Steam inventories for real money. Whether Valve is culpable for the existence of those services is still an unsettled question in the law, Methenitis said, as it has been at least since he wrote about the legal implications of World of Warcraft‘s third-party gold resellers nearly two decades ago.

“I think companies have a pretty strong [legal] argument if they make some attempts to police [third-party resellers]—they obviously can’t fully control what people do outside their platform,” Methenitis said. “But if they turn a blind eye to it and allow it, I think they could be found liable.” Loiterman agreed that Valve “providing the tools that enable those [third-party] markets and tolerating them creates some degree of responsibility.”

“Judges tend to be cautious…”

In the end, the lawyers Ars spoke to were generally skeptical that courts would determine that Valve’s loot box system constitutes illegal gambling. Cases making similar arguments about other loot box systems have failed in other jurisdictions, “in part because gambling laws were drafted with casinos and lotteries in mind,” Loiterman said. “Judges tend to be cautious about breaking from an emerging consensus.”

Hoeg agreed that “the entire question [in this case] is novel, and… the courts are (small-‘c’) conservative institutions, not generally wanting to adopt novel arguments without direction from the legislative branches.” Even if Valve’s loot box system “may start to smell a bit like gambling,” Hoeg said he would “honestly be surprised if the courts went along with the characterization without a new law aimed at it.”

“I view it as a weak case offered primarily for political grandstanding/coverage over real legal effect,” Hoeg concluded. “We shall see, though.”