The hobby of collecting cards has been around for more than a century. In the “early days,” collectible cards were largely marketed to children. Today, adult collectors are turning the hobby into a career by trading valuable cards in secondary markets and using repacking platforms with gambling-like elements. At GME Law, we have prepared a series of articles examining different aspects of the hobby. In particular, we explore whether repacking platforms and physical booster packs may constitute forms of gambling with a focus on Pokémon cards.
The History of Collectible Cards
Collectible cards date back to the mid-to-late 1800s, when tobacco companies used cardboard promotional baseball cards to advertise their products and stiffen cigarette packaging. By the early 1900s, baseball cards were packaged with tobacco, chewing gum or candy with the purpose of boosting the products’ sales. The hobby boomed from the 60s through the 80s as card manufacturer Topps expanded beyond baseball cards into other sports and pop culture cards, with the release of its first Star Wars collectible card series in 1977. The Star Wars set was a massive success and opened the door to a much broader market for non-sports cards.
Then came the 90s with two major developments: Topps introduced what we know today as “inserts” or “chase cards,” and Wizards of the Coast launched the first modern trading card game ever published: Magic: The Gathering in 1993.
Upper Deck describes chase cards as premium products “that are more difficult to obtain than the base set of cards. They are considered a “subset” within the product and will have a distinctive look and design than common cards”. In practice, chase cards have a range of features that make them stand out from common cards, such as special artist illustrations, rainbow effects, shiny coatings, metallic finishes and holographic foils. Some cards even have hand-drawn signatures from personalities or pieces of game-worn clothing, which add layers of rarity and scarcity to the hobby.
Magic: The Gathering was revolutionary because it introduced a new model in which players not only collected cards but used them to build decks and compete against each other. Pokémon followed this trend soon after, with its trading card game launching in Japan in 1996 and Pokémania reaching the U.S. market in 1999.
By the end of the 90s and early 2000s, collectors were not simply buying cards to collect or play with; they were hunting for trading card game inserts.
Love of the Game, or Love of the Thrill?
Card collectibles have grown into a massive market globally. Cards that once cost cents are now worth hundreds, thousands, and even millions of dollars, driven by factors such as rarity, scarcity, condition, and collector demand. According to the Wall Street Journal, some Pokémon cards have had more than 3000% return on investment since 2004, surpassing well-known investing indices like the S&P 500.
Back in my early 2000s days as a Pokémon trainer, buying Pokémon cards was a simple and innocent experience. You’d go to your nearest hobby store, buy a booster pack, open (or “rip”) it and, if you were lucky, you’d pull your favourite Pokémon or a card to further build your playing deck. Today, some collectors still purchase packs to build their collections, while others do it exclusively for the chase cards.
You can still buy physical booster packs presently, but, like many other industries, the Internet has created new methods to purchase cards with modern twists. In 2020, the NBA and Dapper Labs created NBA Top Shot. The idea was that instead of buying physical cards, collectors could buy digital packs containing “moments”. Moments are digital collectibles in the form of short video clips of specific plays from NBA games turned into limited-edition digital assets, similar to NFTs.
Collectible cards can also be purchased digitally through repacking platforms like Rips, Repackz, Boxed and Stadium Vault (among many others). Unlike traditional booster packs, with repacking platforms, the cards are not physically in the buyer’s hands when the purchase is made. Instead, collectors pay to open digital repacks backed by physical trading cards stored in the platform’s vault. While physical booster packs contain several cards, digital repacks often have just one, making a valuable pull feel more like hitting the jackpot. Once the content is revealed, buyers can choose to keep the card in their personal online vault, have it shipped to their doorstep, or sell it back to the platform at its fixed “market value” and either buy more packs or cash out. These automatic buybacks make cards instantly liquid, allowing users to convert them into cash without hustling to find buyers in secondary markets.
So, Is It Gambling?
Whether physical or digital, opening a pack today at the very least resembles a gambling experience. For example, repacking platforms use slot machine mechanics like visual cues or sound effects to build anticipation and the return-to-player, or RTP, (the price of a pack compared to the expected market value of a card) is known in advance. The growing popularity of these platforms is already reshaping the future of card collectibles and possibly the gambling industry. But has ripping really become a new form of gambling or does it just feel like it?
Broadly speaking, gambling requires three elements: consideration (the participant must provide something of value, usually money, to enter); chance (the outcome is determined in whole or in part by randomness rather than the participant’s skill); and prize (the participant receives something of value in return). If one of these elements is absent, the activity will not be legally considered a lottery scheme (gambling).
At first glance, both physical booster packs and digital repacks appear to contain all three traditional elements of a lottery scheme: consideration, because participants pay money to acquire a pack; chance, because the contents are determined randomly; and prize, because the pack may contain a high-value chase card.
If that is the case, why are card manufacturers and repacking platforms able to operate without being treated as lottery schemes? The answer may not be as straightforward as it seems, as we will explore in the articles to come. If you’re interested in reading the next installments of this series, make sure you’re following GME Law on LinkedIn!
*Nothing in this blog is legal advice.
