Loot boxes and skins: the full analysis for builders

A loot box sells a random draw. That settles one of gambling’s three elements before anyone reads a statute: chance is the product. Everything else in the law of loot boxes and skins happens at the two ends of the transaction. Going in, does the player stake something of value, or buy a thing at a posted price? Coming out, is the item a prize worth something, or a cosmetic that lives and dies inside one game? This deep dive follows the second question, where a virtual item becomes a thing of value, through the statutes, the case law since 2017, New York’s pending suit against Valve, the third-party sites that grew up around tradable items, the platforms’ own terms, and the disclosure rules that apply whatever the gambling answer. It ends with the structures publishers use and the condition each one carries.

The short version is a single line that recurs in almost every source below. Where an item cannot leave the game for money, courts in California, Illinois, Maryland and the Ninth Circuit have so far declined to treat it as a prize, with one exception for items that buy more play under Washington-style statutes. Where an item, or the currency that buys it, has a route to cash, the analysis changes. New York has now asked a court to apply that line to skins that trade on a platform market.

The map at a glance

Part 1. The statutory test: value at both ends

New York’s Penal Law is a clear example of the common structure. It defines gambling by value on both sides of the bet, then defines value in four clauses. Read the last clause closely, because it decides more cases than any other:

Washington’s definition, Wash. Rev. Code § 9.46.0285, is nearly word for word the same, and that matters because the leading federal appellate case applied it. A builder can treat the four clauses as four separate questions about any virtual item: is it money or property; can it be exchanged for money or property; is it a credit contemplating a transfer of money; and does it extend play without charge.

Outside the United States, the UK government reached the same dividing line from the policy side. In its 2022 response to a call for evidence, it decided not to bring loot boxes within the Gambling Act 2005, and said why:

Part 2. The cases: five ways the value question has been answered

Extra play is value (Washington)

Kater v. Churchill Downs is the decision that makes a closed economy an incomplete answer. Big Fish Casino sold virtual chips that, under its terms, were not exchangeable for cash. The Ninth Circuit held them to be a thing of value anyway, under the extra-play clause, and in the same opinion rejected the argument that a black-market resale made them valuable:

No money in, no money out (Maryland)

A year earlier the Fourth Circuit took a narrower statute and reached the opposite result on similar facts. Game of War sold virtual gold; players converted it to chips and spun a virtual wheel for in-game resources. Maryland’s loss-recovery statute lets a person who “loses money” at a gaming device recover it. The court held nobody had:

No real-world value, and terms that bar resale (California)

The California loot-box cases turned on real-world value. In Coffee v. Google, the court collected the decisions and dismissed claims that loot boxes in Play Store games were illegal slot machines:

The buyer got what was promised (standing)

Private suits face a threshold before the value question. In Mai v. Supercell, an unpublished Ninth Circuit memorandum that is not precedent, the court vacated a judgment for the publisher on jurisdictional grounds because the buyers had not alleged an economic injury:

A currency with an exit (California, 2025)

The newest decision marks where the line sits. In De Ridder v. Roblox, children alleged they lost Robux on RBLXWild, a third-party site outside Roblox that hosted coin flips, blackjack and plinko. The site’s creator moved to dismiss on the ground that Robux cannot be converted to cash by players. The court denied the motion, and in doing so distinguished loot boxes:

Two features carried the result: Robux work across many games, and a route exists from Robux to cash. The ruling addresses the site operator’s motion. Roblox is a separate defendant; in 2024 the court dismissed some claims against it and let others proceed, and the CourtListener copy of the docket shows the case in discovery in September 2026, with no ruling on Roblox’s liability.

Part 3. Skins: transfer, cash-out and the terms

Counter-Strike 2 skins sit between the cases above. They are cosmetic and buy no play, which keeps them out of Kater’s holding. But they can be traded and sold on the Steam Community Market, which takes them outside Coffee’s facts. Start with Valve’s own terms, which draw the line at Steam’s edge:

Valve set out its position on outside sites ten years ago, when skin-betting sites first drew attention. Its July 2016 post explained how those sites worked and said they were not permitted:

New York’s complaint accepts that the Subscriber Agreement bars off-platform sales, and alleges that the terms and the practice diverge. This is the point on which the Kater footnote turns, because the footnote assumed the operator’s bar on resale was the operative fact:

Valve’s motion to dismiss answers with the cases in Part 2, and adds that the outside transactions are other people’s conduct:

Valve’s public statement to New York customers describes what it does in practice against gambling sites, and defends transferability as a feature players value:

The status, from the court’s docket on September 28, 2026: Valve’s motion to dismiss the amended complaint has been fully briefed since July 27, 2026; on September 22 the court entered an order adjourning oral argument on it. No decision has issued, and none of the allegations has been decided.

The New York case puts three questions that the earlier decisions did not reach. First, whether wallet funds that buy hardware are “property” or an “object or article exchangeable for money or property” when the terms say they have no cash value. Second, whether terms that bar off-platform sales still carry the weight Kater gave them when the complaint alleges they are not enforced against marketplaces. Third, whether a key sold at a fixed price for a guaranteed item is a stake at all, which Valve contests on the authority of New York cases on fixed-price contests.

Part 4. The sites built around tradable items

Where an item or currency has a market value, outside operators have built gambling on top of it. The authorities that have acted against those sites acted against the sites. The FTC’s 2017 action is the U.S. example, and it proceeded on advertising law rather than gambling law:

In Britain, the Gambling Commission prosecuted the operators of a site that took FIFA Ultimate Team coins as stakes. Its release describes the route to cash that made the coins a stake:

De Ridder, in Part 2, is a U.S. court decision on the same pattern, holding that the currency wagered on such a site was a thing of value. Across all three, the item’s market value came from somewhere other than the site: a platform market, an unauthorised secondary market, or a developer cash-out program. That is why platform terms on transfer and conversion are the first line of the analysis.

What the platforms’ terms say about transfer and cash-out

Publishers that run closed economies write the closure into the terms, and several go past cash to cover goods and trading. Electronic Arts, whose FIFA coins figured in the FutGalaxy case, bars both the conversion and the trade:

Epic Games’ terms, updated September 10, 2026 and covering Fortnite’s V-Bucks, extend the bar to goods, which speaks directly to the route New York’s complaint describes through hardware:

Roblox’s terms show the other design: a closed currency for players and a sanctioned exit for creators. De Ridder turned on that exit:

Part 5. The disclosure and sales rules that apply either way

The gambling question is unsettled for tradable items and settled for few others. The sales rules are more uniform, and every structure below has to meet them. The app stores are the widest. Apple’s rule applies to every app it distributes:

Roblox’s creator policy goes further than the stores in two directions. It reaches indirect purchases and odds-changing items, and it builds a per-user switch into the platform so a game can change its offer where regulations require:

EA publishes how its Ultimate Team figures are computed, which answers a question the store rules leave open: what a displayed probability means.

The FTC’s 2025 settlement with the maker of Genshin Impact, covered in the enforcement brief, is the federal statement of the sales rules. It proceeded on children’s privacy, deception and unfairness, not gambling. The FTC’s release describes the currency structure its complaint challenged:

Australia took a third route, through content classification. Since September 22, 2024, a paid loot box sets a floor on a game’s rating:

Part 6. The structures, and the condition each carries

The sources above give a builder a set of design choices. None is free, and each settles one element while leaving something else open. The table sets them against the authorities; the paragraphs after it state the condition that makes each one work.

The closed economy is the structure most of the case law supports, and its condition is consistency. Kater and Coffee both relied on terms that barred resale; New York’s complaint targets the gap it alleges between Valve’s terms and Valve’s practice. A publisher choosing this structure writes the bar into the terms, keeps gifting and transfer tools out of the product or rate-limits them, and acts on the terms against outside marketplaces as well as betting sites.

The extra-play clause is the limit on the closed economy. Under Washington’s definition, and New York’s, a box that yields currency, more boxes or more spins is a box that yields value, whatever the terms say about resale. Keeping box contents cosmetic, as Valve does, takes that clause off the table. Keeping them tradable brings the exchange clause back into play, which is the question New York has put to its court.

A general-purpose currency is a separate risk from the box. De Ridder held that Robux are things of value because they work across games and, for some holders, convert to cash. A platform that runs a creator cash-out program has a sanctioned exit by design. The practical consequence is on the platform’s side of the ledger: the more fungible and cashable the currency, the more attractive it is to outside sites as a stake, and the more the platform’s own controls over transfer and cash-out matter.

Disclosure does not decide the gambling question, but it is the one requirement every structure shares. Apple and Google require odds before purchase; Roblox requires them for indirect purchases and odds boosters; the FTC order adds exchange rates and a direct dollar price. A published method, as EA’s page provides, answers what the numbers mean.

What a builder does with this

1. Classify every paid random mechanic, including indirect ones: keys, re-roll tokens, spin tickets and odds boosters bought with paid currency are all paid random items under Roblox’s policy and the store rules.
2. Decide the item’s exit before launch. Write it into the terms, in the manner of EA, Epic and Roblox: no sale, transfer or conversion to currency or goods, or a defined platform market with wallet-only proceeds.
3. Make the product match the terms. Kater and Coffee accepted the terms because nothing alleged contradicted them; New York’s complaint is built on an alleged contradiction.
4. Check what comes out of the box against the extra-play clause. Currency, boxes and spins are value in Washington and under New York’s definition; cosmetics are not play.
5. Treat a platform currency with a cash-out program as a thing of value in the hands of outside operators, and design transfer controls with De Ridder in mind.
6. Act against outside betting and cash-out sites under the API and user terms, as Valve described doing in 2016 and 2026, and record it.
7. Disclose odds before purchase, per item type, with a stated method; show dollar prices beside virtual currency; gate purchases by under-16s behind parental consent where the FTC order’s terms are the benchmark.
8. Build per-jurisdiction switches for paid random items and trading, and plan the rating consequences in markets such as Australia.
9. Follow People v. Valve. A ruling on the motion to dismiss will be the first decision on whether a tradable cosmetic item is “something of value” under New York law.

The law on loot boxes has moved slowly and in one direction: the closer an item comes to money, the more it is treated like money. Builders who decide where their items stop, and hold that line in the product as well as the terms, are working within every decision read for this piece.

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