You buy a pack of sports cards. Let’s say, a 2020 Panini Prizm NFL Football pack, which retails for about $40. You open your pack of four cards (yes, just four cards) and you end up with three players you have never heard of and a Joe Burrow rookie card. You’re elated! No, you’re a Los Angeles Chargers fan and hoped for a Justin Herbert rookie instead. You’re distraught. Your friend buys an identical pack of sports cards. He knows you’re a Chargers fan and makes you an offer. He says, “If you give me $10, in return I’ll give you every player in a Chargers uniform that I pull from this pack. Deal?” You don’t consider yourself a gambler, but you take a chance. Welcome to the business of sports card “breaking.”
Breaking has been a major driver in the Hobby for decades. Breakers will mix and match different sports card products creating multi-year or multi-sport breaks in which randomized spots are auctioned off to participants. Fixed price pick-your-team (PYT) or pick-your-player (PYP) breaks are also offered, where teams with superior draft classes or a proven rookie are priced accordingly. The participant pays a fraction of the total cost of the product in the break with a chance at seeing an outsized return. The packaging includes odds that show the likelihood of pulling certain rare variations of cards (e.g., 1:25, 1:100, etc.). Like any savvy investor up against the odds, hedging is always an option by purchasing several teams within the same break. When participants in the break receive cards in return for their payment, it can easily be characterized as a sale from a legal perspective, even if the cards’ value does not total the price paid. However, if a breaker fails to pull a single card from a participant’s selected team or player, it looks less like a sale and more like a losing bet.
Gambling is comprised of three elements: (1) a prize, (2) some degree of chance, and (3) consideration, often a type of payment or activity required to participate. Most folks in and around sports card collecting would agree that it is not at all controversial to characterize one’s participation in breaking as gambling. It is an accepted and necessary evil of the Hobby. Live streaming platforms like Drip, Whatnot, or Twitch and auction sites like eBay provide breakers a platform to peddle their wares. The legal issue is whether these platforms are effectively functioning as unregulated gaming sites when selling spots in sports card product breaks.
Last week, eBay released revised guidance regarding who is and is not allowed to sell break spots on their auction site.[1] In a short email sent to select account owners, eBay stated, “Effective July 18, 2023 case, box, and pack breaks may only be sold by pre-approved sellers. Any live auctions underway can be completed but after July 18 you’ll no longer be able to start new break listings.”[2] The auction house cited an effort to support sellers as the reason for the culling of approved breakers. By limiting sellers’ ability to offer break spots, it seems as though eBay is attempting to clean up the space. These changes are the first made by any auction house or streaming site to tamp down on unscrupulous actors in the breaking community.
When applying to sell on Whatnot, dealers must agree not to offer any razzes (a single card raffle or lottery) or duck races (literal simulated duck races used to determine random outcomes). Each is a game of chance that produces absolute winners and losers. Despite the platform highlighting and outlawing these two forms of gambling, breaking continues to be among the site's primary uses. Mobile sports wagering is currently disallowed in Florida, while Backyard Breaks (a massively popular group of professional breakers located in south Florida) have found great success running near 24/7 breaks using the Whatnot app. This is not an indictment of breakers. They provide a valuable service for those that cannot afford inflated product prices but still want to meaningfully participate in the Hobby. This is an indictment of streaming platforms that fail to do due diligence.
Participating in breaks is gambling. There is a prize, there is a degree of chance, and the consideration paid by participants is sometimes more than they are willing to lose. Auctioning off spots in a sports card break is likely a fraction of the selling done on eBay. However, seeing a leader in the space electing to sacrifice profits to curtail gambling tendencies is good business. Your friend opens his single pack of 2020 Panini Prizm NFL Football. To your chagrin, the first three cards are duds. Then he pulls a green prizm Herbert rookie, which retails for about $85. JACKPOT! What a return on your investment! You’re hooked.
Nate Otto is a rising 3L at the University of Florida Levin College of Law and the Executive Articles Editor for the Florida Entertainment and Sports Law Review. Find his store on eBay @BlueWhippetSportsCards.
Sources:
[1] Rick Mueller, eBay to Limit Break Listing to Pre-Approved Accounts (visited June 15, 2023) https://www.sportscollectorsdaily.com/ebay-to-limit-break-listings-to-pre-approved-accounts/. [2] NEO Cards & Comics, eBay cracking down on sports card breaking, must be pre-approved (viewed June 19, 2023) https://www.youtube.com/watch?v=ZG4-mrCVfQc.
