Whatnot Faces RICO, Illegal Lottery Allegations Tied To Sports Card Breaks
Livestream shopping platform Whatnot is facing allegations of operating an illegal gambling operation and violating the RICO Act by allowing sellers to conduct randomized box breaks and randomized repack breaks—sealed packages of collectible items—on its platform.
Attorney Paul Lesko at Leskow Law, known for his commentary on sports card law, has filed 15 arbitration requests and represents 30 clients in claims against Whatnot, The New York Times reported. The filings argue that randomized box breaks breach California's laws prohibiting illegal lotteries (Whatnot is headquartered in California but incorporated in Delaware), while repack breaks function as unlawful "grab bag" lotteries for trading cards.
"Whatnot knowingly operates an addictive platform without sufficient safeguards and controls. They are basically making money off of dopamine, rather than just selling cards. Our clients who have addiction issues and have tried to get off the platform. There aren't safeguards such as the ability for self-banning or meaningful spending limitations to the point that these are things that are required by online casinos but are not available on the Whatnot platform," Lesko said in a CllctMedia video posted on X.
Lesko argues that Whatnot should have the same guardrails as online casinos in order to protect people from online gambling addictions.
The plaintiffs are seeking legal recognition that these breaks constitute illegal gambling, along with restitution, compensatory and punitive damages, and court orders requiring Whatnot to add warnings, implement consumer protections like spending limits or self-exclusion tools, and halt randomized box and repack breaks.
"We absolutely reject the characterization in this complaint," Whatnot said in a statement to The Athletic. "Gambling isn't allowed on Whatnot, and we strictly enforce this policy. … Card breaks are a long-standing format in collecting — at card shops, conventions, and in communities that have thrived for generations. And while sellers who ‘break' only make up 4 percent of sellers on our platform, we've taken care to bring that experience online in a way that holds everyone accountable. Whatnot shows happen live and on camera, sellers face real consequences when they break our rules. We've set the standard for how these formats work online, and we're committed to maintaining it."
Lesko added that he has chosen to make the normally private arbitration process public due to the fact that Whatnot recently changed its arbitration agreement in March from paying for the arbitration process to splitting the fees with the consumer.
"That is going to be a very big hindrance to certain people who have smaller claims. A $50,000 claim is not a small claim, but that will get eaten up in arbitration fees alone. Although I believe Whatnot's arbitration provision is unlawful and will be shot down, they did offer a 30-day opt-out period," Lesko said in the YouTube video.
Whatnot's terms of service require disputes to go through private arbitration; users have a 30-day window to opt out and retain the right to pursue court action.
In 2025, Whatnot reported gross merchandise sales exceeding $8 billion, doubling its 2024 performance.
The company stated that more than 20 million users created accounts in 2025 and one in eight sellers are now selling full-time on the platform. Sports cards remain the platform's top category, with over 6.4 million cards purchased each month.
Whatnot did not respond to Benzinga’s request for comment.
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