Digital card pack rips reach $2 billion annualized run rate, report says
Bank of America compared the economics of digital card packs to a slot machine and expects the industry to face increased scrutiny as it grows.
Key points
- Digital pack rip platforms reached an annualized run rate of $2 billion, according to Bank of America.
- Active users grew from 50,000 to 1.7 million over the past 12 months, the report said.
- PrizePicks launched its pack product in all 50 states and Washington, D.C., on Oct. 21.
- Bank of America expects increased scrutiny if digital pack rips continue to grow.
Digital trading card pack rips have reached an annualized run rate of $2 billion, according to a Bank of America report, as gambling companies expand into the US collectibles market.
Gambling Insider reported that Sportico obtained the report on Wednesday. It said active users on digital rip platforms increased by 34x over the past 12 months, from 50,000 to 1.7 million.
Users buy a digital pack and see a single card revealed in an app. They can keep the card, have the physical card shipped or sell it back to the platform. According to Sportico, most users choose an immediate sale.
Buyback offers are typically below a card’s appraised value, often around 85% to 90%, and some platforms pay in site credit rather than cash. The Bank of America report said operators keep at least 6% of pack sales and that, on average, the card is worth less than the pack price.
Bank of America likened the economics to “a slot machine.” Ken Goldin, founder of Goldin Auctions, also compared the products to gambling, telling Sportico: “It’s slot machines for kids, isn’t it?”
Digital rips are regulated as e-commerce rather than gambling, according to Gambling Insider. PrizePicks launched PrizePicks Packs in all 50 states and Washington, D.C., on Oct. 21. Underdog, OG.com and Crypto.com have also entered the market, while FanDuel has tested rips through its rewards program.
Bank of America said it expects increased scrutiny if digital pack rips keep growing. The report also said legal experts it consulted believe the category has a solid regulatory footing as long as cards are backed by physical inventory.
The $2 billion run rate excludes live breaking, in which buyers pay in advance for a share of cards opened by a streamer on camera.
Sources
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