Ripping yarns: BofA sees digital card-pack market as gambling’s next frontier
The delayed expansion of regulated US online casino gaming is creating space for another generation of gambling-adjacent products, according to Bank of America. The analysts believe digital trading card “rips” could become a significant new vertical for operators seeking growth beyond sportsbooks.
“The pace of true digital online casino legalisation is slower than many operators hoped,” the team wrote in a note published last week. “Innovators are filling the gaps quickly.”
The BofA report places rips alongside sweepstakes, prediction markets and historical sports products as examples of businesses meeting demand beyond conventional gambling markets.
“Just as prediction markets enabled nationwide access to a sports betting like product and blurred the lines between gambling and finance, we think pack rips could find a similar niche to bridge between gambling and collecting.”
From collecting to cashing out
Digital rips reproduce the experience of opening physical trading card packs, with an additional layer of immediate pricing and liquidity. Customers buy and open packs virtually, then choose whether to sell cards back, retain them in storage or request physical delivery.
The underlying collectibles range from sports cards to Pokémon. The appeal, the analysts suggest, is familiar: the possibility of finding something exceptionally valuable among more ordinary cards.
“Pack rips have a slot-like payoff distribution mechanism, with users chasing unique or rare cards (the 1-of-1 card or jackpot), while simply selling back unused or unwanted cards immediately.”
That combination has attracted a rapidly expanding audience. Bank of America estimates that weekly active users have increased from approximately 50,000 a year ago to more than 1.7 million, with annualised category revenue approaching $2 billion.
Its analysis of blockchain transactions puts annualised gross merchandise value at approximately $13 billion. Estimated weekly transaction volume has risen from around $14 million to nearly $250 million over the past year.
The activity extends well beyond sports. Blockchain data cited in the report attributes approximately 58% of rips to Pokémon and 15% to sports, while roughly 70% of volume involves packs costing less than $25.
Sportsbooks join the chase
For betting operators, the attraction combines recognisable customer behaviour with an opportunity to cross-sell. “Rips represent a natural new vertical for online sports betting and iGaming operators, given similar gaming or lottery mechanics and customer demographics,” the analysts wrote.
FanDuel has announced a partnership with Arena Club, while Underdog and PrizePicks already offer rips. The report also identifies Coinbase, Crypto.com and Betr as businesses moving into the category.
Among dedicated apps, Rips by Triumph leads with approximately 55% of active users. Bank of America cites an Eilers & Krejcik valuation of around $2.5 billion for Triumph, illustrating the value already being attached to the opportunity.
Users skew young. The bank’s demographic analysis puts 39% of rips customers in the 25-34 age bracket and another 20% between 18 and 24.
Sports content provides an obvious connection with sportsbook customers, but the analysts also identify an affinity with online casino products. “Like OSB operators were able to cross-sell to iCasino, we think this represents a similar opportunity,” BofA wrote.
Two sources of revenue
The initial economics resemble gambling hold – operators retain the difference between the pack price and the expected value of its contents. “The operator earns a relatively fixed expected take rate based on the difference between the price paid to open a pack and the expected value of the cards inside.”
BofA estimated that most packs embed an initial take rate of approximately 5%-10%, broadly comparable with slot machine hold. The analysts’ central estimate translates $13 billion of annualised transaction volume into approximately $1 billion of initial-rip revenue.
Buybacks provide another potential revenue stream. Some operators offer customers approximately 85%-90% of a card’s fair market value, retaining a spread when customers choose immediate payment.
“While the discount may appear significant, instant liquidity provides utility relative to the traditional card-opening experience, where lower-value cards can be difficult or uneconomic to resell.”
Terms vary, however, with several operators offering buybacks at full fair market value. The bank’s central revenue model assumes repurchases at 94% of fair value, generating approximately $750 million of additional annualised revenue.
Longer term, the analysts’ central addressable market estimate reaches approximately $30 billion for initial rips, with a further potential $10 billion from repurchases.
Physical cards, real exposure
The slot comparison has limits. Every digital card is backed by physical inventory, creating sourcing, fulfilment and valuation exposure. “Pack rips carry a material COGS expense because every digital card is backed by physical inventory,” the analysts said.
Rare cards also serve as marketing assets. PrizePicks acquired three NBA Debut Patch cards for more than $13 million, including an $8 million Cooper Flagg card, providing desirable inventory to attract customers. “Inventory is increasingly being used as a customer-acquisition tool.”
Competition for those assets could increase costs. The report says trading card prices have risen approximately fourfold since 2020 and around 60% since January 2025, while stopping short of attributing that appreciation solely to rips.
The downside could be substantial: the analysts estimate a 40% decline in inventory fair value would reduce gross profit by approximately 55%.
A legal distinction under scrutiny
Regulation represents the other principal risk. The report identifies California claims against Whatnot and Fanatics Live alleging randomised breaks and repacks breach gambling and lottery laws. It notes that no court or arbitrator has yet ruled those formats constitute illegal gambling.
The defence rests on the underlying purchase. “The legal argument is that pack rips are a retail transaction, not gambling: customers are buying a physical collectible, with randomness determining which card they receive rather than whether they win a prize.”
Bank of America says legal experts it consulted believe physical backing provides a solid regulatory foundation, while anticipating increased scrutiny as adoption grows.
Trading cards’ popularity among children adds another consideration.
“Given the historical popularity of trading cards among kids, we think avoiding marketing to minors will be particularly important as the category scales.”
Leading operators currently restrict access to adults aged 18 and over. For gambling businesses considering entry, the report presents an expanding commercial opportunity whose economics depend on both digital engagement and the physical collectibles supporting it.