Fanatics Live Lawsuit: Are Card Breaks Unlicensed Online Lotteries?

A legal storm is brewing in the United States over one of the biggest players in sports merchandising. A whistleblower lawsuit filed under the California False Claims Act is targeting the streaming platform Fanatics Live. The allegation is serious: the company is said to have organized unlicensed lotteries through its card-break formats. These are live broadcasts in which sealed card packs are opened, with buyers previously purchasing spots for random teams. Since the value of the cards drawn can fluctuate massively, critics see this as a classic gambling element for which Fanatics does not hold a license.

Fanatics attempts to distance itself outwardly by explicitly prohibiting sellers on its platform from games like roulette, raffles, or spinning wheels. However, so-called Random Team Breaks are allowed, where every participant pays the same price and is randomly assigned a team. The lawsuit, filed in July 2025 against Fanatics Live and competitor Whatnot, alleges that these practices were knowingly used to bypass necessary gambling licenses and taxes. It is particularly noteworthy that Fanatics produces the cards traded in these live streams itself through the Topps brand, which it acquired in 2022.

Numbers and facts

The dimensions of the lawsuit are considerable. A total of 18 named plaintiffs from at least 11 US states have joined forces. According to reports, individual participants spent sums ranging from a few hundred dollars to more than $4 million on breaks on Whatnot and Fanatics Live. This illustrates the enormous financial risk and potential for addiction inherent in these supposedly harmless hobbies. Fanatics itself is deeply involved in the ecosystem: the company expects to distribute more than $1 billion in FanCash rewards in 2026 alone, some of which can flow directly into collectibles or bets.

A spokesperson for the California Department of Justice stated that the agency would not intervene in the case for the time being. The plaintiffs had until August 2026 to decide whether to pursue the proceedings on their own. In parallel, at least four antitrust lawsuits are ongoing from so-called breakers against TikTok and Fanatics, as accounts were banned for alleged violations of gambling policies. The complexity is highlighted by statements from executives like Matt King, CEO of Fanatics Betting & Gaming:

„We’d rather give $1 back to customers than spend $1 in advertising." - Matt King, CEO, Fanatics Betting & Gaming

Background

The card-breaking model has evolved into a multi-million dollar market in recent years. Fanatics Live launched in July 2023 and integrates features like Instant Rips, where digital packs are opened immediately and the cards are stored in a vault. The appeal lies in gamification. Nick Bell, head of Fanatics Collect, spoke in a podcast back in March 2025 about how exciting the possibilities for gamification in this area are. But it is precisely this blurring of collecting passion and the chance of winning that is now bringing the judiciary onto the scene. While Fanatics claims not to offer gambling, they allow features where buyers can accept an instant offer of 90 percent of a card's appraised value in the form of platform credit, which resembles a payout in a bet.

Why it matters for German players

For German users, the legal situation is clear but often unknown. Card breaks, where chance determines the value of the consideration, could fall under the strict State Treaty on Gambling 2021 (GlüStV 2021). In Germany, the Joint Gambling Authority of the Länder (GGL) monitors such offers. If products with winning chances are offered for a fee, a license is mandatory. German players should note that platforms like Fanatics Live are currently not on the official GGL whitelist. This means they do not enjoy the protection of German regulations, such as the cross-provider deposit limit of 1,000 euros per month in LUGAS or the stake limit of 1 euro per spin for slots. Participation in unlicensed lotteries can also carry legal risks in Germany and offers no player protection guarantees.

What it means for GGL-licensed casinos

Licensed German online casinos must strictly adhere to the requirements, while international platforms like Fanatics attempt to gain market share through gray areas. For operators with a GGL license, the development in the USA is a confirmation of clear rules. The mixing of sports betting apps with collectible rewards, as practiced by Fanatics in its all-in-one app since September 2, would hardly be conceivable in Germany due to the separation requirement for different types of gaming and strict advertising guidelines. German providers instead focus on transparency and the exclusion of loot-box-like mechanisms to avoid risking their licenses.