Adam Brown – Although sports cards have been around since the mid-1800’s, the industry has seen a boom the likes of which it has never seen over the past year. While many people traditionally view collecting sports trading cards as a nostalgic children’s hobby, the reality of the industry is quite the opposite. Fueled by the Covid-19 pandemic, volatile stock market, and increased accessibility to online marketplaces, the sports cards market has been flooded with money as many collectors are considering their purchases to be art-like with investment potential. As of 2020, the sports cards market was conservatively valued at over $5 billion dollars, with the most sought after cards often selling for millions of dollars each.
The current state of the sports card market is dominated by collectors opening boxes of cards typically released by Panini—the leading sports card manufacturer—searching for extremely rare cards that could be worth millions of dollars, similar to treasure hunting. Due to the potential of pulling one of these cards, a sealed Panini box of sports cards could resell on secondary markets for up to $30,000. The astronomical value of boxes has led to the introduction of the now wildly popular “box-breaks.” Rather than spending the money to buy an entire sealed box, many sellers will break a box into ten spots, where people can then purchase a spot that will get a randomized sports team assigned to it. The seller will then open the box of cards live on social media, usually on YouTube or Facebook, and the purchaser of each spot will get the cards that are pulled out of the box for that spot’s respective team. This enables people to have a chance at obtaining an extremely rare and valuable card at a fraction of the price that an entire sealed box would cost on the resell market.
While box-breaks have taken over the industry with collectors looking for cheaper ways to hit a jackpot, the legality of them has been brought into question due to their gambling nature. Most state gambling statutes provide that if a game has a prize, an element of chance in determining the winner, and consideration, it is considered an illegal form of gambling. In the case of box breaks, the prize would be the cards obtained from the break. The consideration is the price paid for each spot in the break. Lastly, the element of chance in determining the winner is present in the randomizing of teams for each spot, as well as the element of chance present in having no valuable cards pulled from the box. Furthermore, PayPal has recently been suspending accounts of merchants who are suspected of running box-breaks, as PayPal considers it to be a gambling activity. PayPal is one of the primary forms of payments for box-breaks, so a crackdown by PayPal would likely negatively affect the industry.
With the sports card industry booming and more lucrative than it has ever been, it will be interesting to see if any regulatory authorities step in and investigate the current state of the industry and the nature of these box-breaks. If so, the sports card industry may take a rapid turn south and become reminiscent of the Although the industry has heavily rebounded since then, collectors may want to consider the possibility of another crash before spending millions on their next investment.
