Valve Cites Pokémon Cards, Happy Meals, and Labubus as Potential Collateral Damage of New York Lawsuit

The Valve Corporation has filed a motion to dismiss the lawsuit brought forth by New York Attorney General Letitia James, which sought to ban Counter-Strike skin case openings under New York statute.

Amongst the arguments presented in the motion, Valve’s representatives cite Baseball, Pokémon Cards, and Magic: The Gathering cards as potentially matching the New York Attorney General’s definition of gambling, citing other examples such as Labubus or even McDonald’s Happy Meals.

Valve motions to dismiss New York lawsuit

The motion to dismiss regards a New York lawsuit that argued that case openings in Counter-Strike 2 through “loot boxes” constituted gambling according to existing New York statute, accusing Valve of using “the same mechanical and psychological lures as traditional casino games” in loot boxes.

In a statement regarding the original lawsuit, James stated, “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.”

On Monday, Valve moved to dismiss that lawsuit in a 42-page document outlining its legal arguments for dismissal. The motion contains several arguments used by Valve’s representatives, Nola B. Heller and Matthew Laroche of Milbank LLP, to persuade the Supreme Court of the State of New York that the motion should be dismissed.

Amongst them is the argument that the New York Attorney General’s interpretation of New York Penal Law Article 225 would prohibit “all commercial transactions that involve an element of chance, if the initial purchase can later be converted to cash in a separate transaction with third parties.”

The document outlines the following products and services it believes would fall afoul of that threshold, listing:

• “Baseball card packs, Pokémon card packs, or Magic: The Gathering packs, all of which
  randomly include cards that can be sold at varying prices on secondary markets;
• “Physical blind boxes, including Happy Meals, Cracker Jack boxes, cereal box toys,
• “Labubus, and randomized LEGO minifigure packs;
• “Grab bags at comic book stores;
• “Fashion or book box subscriptions with randomized selections; and
• “Arcade establishments like Chuck E. Cheese—where customers purchase tokens, use
  the tokens to play games of chance, win tickets based on the randomized outcome of
  those games, and exchange those tickets for real-world prizes.”

Other arguments listed in the motion include that Article 225 does not apply to loot boxes, that the law is being used in an inappropriate, ex post facto (retroactive) fashion, that the lawsuit “Infringes on New York’s Separation-of-Powers Doctrine,” and that skins are “Constitutionally Protected Forms of Expression.”

Valve is also facing another lawsuit in its home state of Washington, facing a suit that largely argues the same points over loot boxes and their relationship with problem gambling. While many of the same arguments may be used, the suit is subject to differing state laws.

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