Card Rips Are Gaming's Newest Gray Market, and FanDuel Is Watching From the Sideline

By SCCG Management

U.S. gaming keeps producing products that look like betting, earn like betting and aren't regulated like betting. Daily fantasy, pick'em, sweepstakes casinos and prediction markets all fit that description. The newest is the digital card rip.

A customer pays for a pack drawn at random from a pool of real trading cards and opens it on their phone. Each digital card is backed by a vaulted physical card. The customer can ship it, store it, or, as most do, sell it straight back to the platform and buy another pack.

A house edge by another name

According to Sportico, platforms typically disclose an average pack value 5% to 15% below the price. Barron's reports instant sell-back rates as high as 98% at some apps. Davis Catlin of Discerning Capital told Sportico the product is "effectively a slot machine without gambling taxes." Rips earn a slot-like margin but are sold as e-commerce, with no gaming tax and no regulator checking randomization, inventory or pricing.

Who's in, and who's out

Fanatics, which owns Topps, a card vault and an auction house, has offered rips for more than a year. Collectors Holdings (PSA) launched rips with GameStop in April and owns Card Ladder, the pricing index most platforms rely on. Underdog added rips this fall, and Sportico lists PrizePicks and OG as entrants. Coinbase has announced its own product. Specialists such as Courtyard, Arena Club and Rips by Triumph, which DraftKings' venture arm Drive has invested in, hold significant share.

FanDuel is the notable absence. Flutter CEO Dan Taylor told Barron's the company is only "tracking" rips, sending frequent bettors free credits for Arena Club rather than building its own product. FanDuel was also slow on pick'em and prediction markets, where it holds less than 1% of U.S. volume this NFL season, per Sportico. Its caution protects its licensing prospects in states such as California. But Flutter shares are down about 60% year over year, and Taylor has told shareholders the company must move faster.

The question regulators haven't asked

No state has challenged rips as gambling. One rips executive told Sportico most regulators likely don't know the products exist. Platforms argue the physical card makes rips no different from buying a pack at a hobby shop. But if the prize is effectively cash, the outcome is random and the customer pays to play, rips meet the three elements that define gambling. Private lawsuits over breaks and repacks on platforms like Whatnot are already testing that theory. No court has ruled yet.

For licensed operators, the choice is whether to join, partner or wait for regulators to act. Either way, the gaps in oversight of randomization, inventory and responsible gaming are already visible.

Next in this series: how a digital rip actually works, step by step, and where the house edge sits.

Source reporting: Sportico, "FanDuel's Latest Crossroads: Digital Card Rips" (November 2026); Barron's.