Whatnot, the collectibles marketplace that shifted 76 million sports cards last year, is facing a legal challenge from customers who reckon its card break formats cross into gambling territory. Fifteen arbitration demands have been filed, all targeting the platform’s box breaks and repack breaks as operating outside California’s lottery laws.

The crux of the argument is simple: pay money, get random outcome, hope for value. Attorney Paul Lesko, representing 30 clients, claims that’s not shopping, that’s wagering. Repack breaks in particular come under fire for resembling grab bag lotteries, where chance determines what you walk away with rather than transparent value exchange.

The Scale of the Operation

Whatnot isn’t some backroom operation. The platform pulled in $8 billion in sales last year and added 20 million users to its books. Sports cards represent the biggest slice of that pie, with millions changing hands monthly. Box breaks and repack formats make up a fraction of overall seller activity, around 4% according to the company, but they’re clearly popular enough to warrant attention.

The mechanics are straightforward. Buyers pay for a slot in a break. Cards get randomized. You receive whatever the draw allocates. Land a rookie autograph or vintage gem? Brilliant. Base cards worth pennies? Tough luck.

That randomness sits at the heart of the dispute.

Industry Voices Weigh In

Jason Masherah, president of Upper Deck, didn’t mince words when asked about repack formats. He called the current setup “purely gambling” and predicted trouble ahead for the industry if things continue as they are. Coming from a major card manufacturer, that carries weight. These aren’t complaints from pearl-clutching outsiders, mind you. People inside the hobby see the issue.

Whatnot’s defence leans on tradition. Card breaks have existed at shops and conventions for decades, the company argues. They’re bringing an established format online with accountability measures in place. The platform maintains it prohibits gambling and enforces that policy strictly.

What Happens Next

A judge will determine whether these arbitration cases proceed. That decision matters beyond Whatnot’s immediate legal headache. If the claims gain traction, other platforms running similar formats could face scrutiny. The collectibles market has exploded in recent years, fuelled partly by break formats that make expensive boxes accessible through shared risk and reward.

Look, the question isn’t whether breaks involve chance. They obviously do. The question is whether that chance element, combined with monetary stakes and variable outcomes, tips the activity from collecting into gambling under existing law. California’s lottery statutes weren’t written with livestreamed card breaks in mind, granted, but they might end up defining how the format operates going forward.

For buyers who’ve dropped hundreds or thousands on break slots, the outcome could reshape how they engage with the hobby. For platforms like Whatnot, it could mean operational changes or clearer regulatory boundaries.

Either way, this won’t be the last we hear about randomized collectibles sales and where they fit in consumer protection law.

What the team thinks

Carl Mitchell says:

Been watching card breaks blow up online for years now, and honestly, I’ve always thought the line between that and what we do in slots was thinner than the platforms wanted to admit. The randomness factor and pay-to-play structure has proper gambling mechanics written all over it, though I reckon Whatnot will argue the collectible angle gives it product value regardless of outcome. What this really highlights is how regulators are miles behind the times when it comes to these hybrid formats that mix commerce, community, and chance.