(By You Yunting) In February 2026, the New York State Attorney General sued the well-known game developer Valve Corporation (“Valve”) for illegally promoting gambling through in-game “Loot Box” feature in its video games. In fact, several months before the filing, Valve—likely anticipating regulatory pressure—actively lowered the drop rates for certain rare items in Counter-Strike 2, triggering a flash crash in the global virtual item market and causing heavy losses for speculators. The lawsuit far across the Pacific Ocean has also struck a nerve with China’s gaming community since a large number of Chinese players remain active on Global Steam in China which is on the edge of regulation. Because of the gambling allegations surrounding Valve’s own games, this gray zone now faces unprecedented regulatory risks. We will analyze these legal issues under both U.S. and Chinese legal frameworks.