A California whistleblower suit filed in July 2025 under the state's False Claims Act alleges that Fanatics Live and rival platform Whatnot operate unlicensed lotteries through card breaks, a format in which collectors buy into livestreamed openings of trading card packs. Fanatics bans spins, roulette wheels and raffles on its platform but permits random team breaks, where customers pay a flat price and receive a randomly assigned team.
The suit names 18 plaintiffs from at least 11 states who spent between a few hundred dollars and over $4m on breaks across Whatnot, Fanatics Live, or both. California's Department of Justice declined to intervene. Plaintiffs had until August to decide whether to pursue the case independently; no update on that choice has surfaced. Separately, attorney Paul Lesko filed arbitration demands by June on behalf of nearly 70 Whatnot customers, claiming the platform violated California lottery laws. No final arbitration ruling has been issued.
Fanatics controls several layers of the card-break industry at once. The company produces trading cards through Topps, acquired in 2022, sells its own mystery boxes, and runs the platform where sellers open packs on camera. Its FanCash programme lets sportsbook customers spend points earned from wagers on merchandise, including signed rookie cards. On 2 September Fanatics merged its sportsbook (23 states plus DC), online casino (four states) and prediction market into a single app. The company plans to distribute over $1bn in FanCash this year.
At least four antitrust suits have been filed against Fanatics by sellers who say they were banned from TikTok over 'gambling allegations' and pressure to work exclusively with Fanatics. TikTok Shop has required random team breaks to use its own randomisation tool since 25 September. No US regulator has ruled whether card breaks constitute gambling. The California Gambling Control Commission said the decision sits with the state attorney general.
