I haven't seen an update on the lawsuit posted anywhere and it's been a long time. I think it's appropriate to post this here because like it or not cosmetics and cases are a big part of this game and the ruling will affect CS.
Source: article on tech-insider.org (features a really detailed breakdown of the lawsuit and summation of the arguments).
Basic breakdown:
NYAG's main argument asserts that because third party market places exist, random items from loot boxes in Valve's games constitutes them running an illegal casino (they are saying people are opening cases so that they can then cash out the items for real money).
Valve's argument is that loot boxes are like buying a pack of baseball cards (randomized commerce) and that if existing law is interpreted in the way NYAG says it should be, that should loot boxes be considered gambling, trading cards, cereal boxes with prizes, blind bags, labubu's etc. can all also be considered forms of illegal gambling under existing law (NYAG sort of confirmed that might be the case).
Valve filed a motion to dismiss in May this year and the court will hear oral arguments in January before coming to a decision.
Also noteworthy is that 3 class action lawsuits in individual states from people claiming damages from losses from opening loot boxes have been combined into one federal(?) one, and Democratic lawmakers are looking to introduce disclosure rules and age gating.
The class action stuff is basically reliant on Valve losing vs. NYAG as I understand it, otherwise it is likely to fail (there have been many similar civil cases brought against Valve over loot boxes in the US and they have all failed).
The lawmaker stuff is also reliant on the outcome of the court case. It actually seems to have changed over the last couple months because last time I looked it up they were basically trying to ban loot boxes in the US.
Most likely outcomes are that either Valve's motion to dismiss gets upheld (loot boxes are like trading cards) or the lawsuit actually goes ahead, which will take a long time and in the meantime most likely NYAG and Valve will come to an agreement which will determine what new law would look like (i.e. meaning regulation) and Valve's liability in the class action stuff.
My thoughts are that for NYAG's argument to be upheld people would actually have to be opening cases to intentionally sell for real money and I don't think anyone is actually doing that IRL.