Bank of America identifies digital card packs as gambling's next major frontier

The landscape of digital gambling is shifting toward new horizons that don't necessarily involve traditional casino tables. Analysts at Bank of America have pinpointed a trend that is rapidly blurring the lines between a collecting hobby and high-stakes gambling. Known as digital card pack rips, this activity is becoming a formidable competitor to conventional online casinos. With the legalization of iGaming moving slower than expected in many US states, innovators have stepped in to meet demand with products that offer instant liquidity and high-stakes excitement.

The appeal of these products lies in the thrill of the unknown and the chase for a jackpot-style win. Customers purchase virtual packs containing digital representations of sports stars or Pokémon characters. This process mirrors the mechanics of a slot machine: an upfront investment made in the hope of revealing a rare card worth many times the initial cost. According to experts, this has evolved into a multi-billion-dollar industry focused on rapid trading, immediate valuation, and direct cash-outs.

Numbers and facts

The growth statistics presented by Bank of America are staggering. Weekly active users have exploded from approximately 50,000 to over 1.7 million in just one year. Based on blockchain data, the annualized gross merchandise value is estimated at roughly $13 billion, with the category generating nearly $2 billion in annualized revenue. The content distribution is also telling: Pokémon accounts for about 58% of rips, while sports cards make up 15%. A significant 70% of the volume involves packs priced under $25, highlighting the mass-market appeal.

"Pack rips have a slot-like payoff distribution mechanism, with users chasing unique or rare cards (the 1-of-1 card or jackpot), while simply selling back unused or unwanted cards immediately." - Scott Longley, Analyst at iGaming Business

The underlying economic model is remarkably similar to traditional casino operations. Operators earn a take rate based on the difference between the pack price and the expected value of its contents. Bank of America estimates this initial take rate at 5% to 10%, which is broadly comparable to the hold on a standard slot machine. Furthermore, platforms profit from buybacks, often offering customers only 85% to 90% of a card's fair market value for instant liquidity.

Background

Major sports betting operators are now racing to capture this market. Companies like FanDuel, Underdog, and PrizePicks have already launched products or formed strategic partnerships. The primary driver is demographics. Analysis shows that 39% of rip customers are aged 25 to 34, and another 20% fall into the 18 to 24 bracket. This is the exact audience targeted by sportsbooks and online casinos, making card rips a natural cross-sell opportunity given the shared demographic and gaming mechanics.

However, the sector faces significant hurdles. Bank of America explicitly warned of regulatory risks. Many jurisdictions are currently debating whether loot-box-style mechanics constitute illegal gambling if they fail to guarantee value or lack transparency in odds. Additionally, inventory sourcing remains a bottleneck, as the value of digital cards is often tied to the physical availability and cultural relevance of the underlying brands.

Why it matters for German players

In Germany, the legal situation is strictly governed by the Interstate Treaty on Gambling 2021 (GlüStV 2021). While pack rips often operate in a legal gray area internationally, any product involving a stake for a chance to win is subject to oversight by the Joint Gambling Authority of the States (GGL). German players should exercise caution, as platforms offering these mechanics without a German license are considered illegal. Players at licensed operators benefit from the LUGAS system and are subject to the cross-operator deposit limit of 1,000 euros per month.

Furthermore, Germany enforces a strict 1-euro stake limit per spin for virtual slots. If digital card packs were officially classified as gambling, they would have to adhere to these restrictions. Currently, such products are rarely found on the official GGL whitelist as they often attempt to be classified under entertainment or e-commerce. However, the GGL is closely monitoring loot boxes and similar mechanics to ensure youth protection.

What it means for GGL-licensed casinos

For operators with a German GGL license, this trend represents both a challenge and an opportunity. On one hand, it offers a massive chance to diversify and attract younger audiences who might find traditional slots unappealing. On the other hand, the regulatory burden in Germany is immense. A GGL-licensed casino would need to prove that pack rips do not use unfair algorithms and that addiction prevention measures are effective. Nevertheless, it is likely that licensed providers will eventually seek to integrate similar gamification elements, provided they receive regulatory approval.