Week 1 Wrap: The Card Rips Landscape in One Page

By SCCG Management

Digital card rips are still unregulated, but this week the category got a number. A Bank of America report shared with Sportico puts digital pack rips at an annualized revenue run rate of about $2 billion, with weekly active users rising from roughly 50,000 to more than 1.7 million in about a year. The bank says operators keep at least 6% of what users spend. Its estimate excludes live breaks, so the wider pack-opening market is larger.

The owners of the card

The strongest positions belong to companies that control physical supply and pricing. Fanatics has sold rips for more than a year and owns Topps, a vault in Oregon and an auction house. Collectors Holdings, parent of PSA, has run rips with GameStop since April and owns Card Ladder, the valuation index most rips apps rely on. Arena Club combines grading, vaulting, sales and packs. Courtyard and Rips by Triumph round out the specialists, and DraftKings' independent venture arm, Drive, has invested in Rips by Triumph.

The betting and exchange entrants

The second group comes from DFS, prediction markets and crypto, and it brings large customer bases. Underdog launched rips in late August through a partnership with Phygitals. PrizePicks says it launched PrizePicks Packs on Oct. 21 in all 50 states and D.C., with tiers from $1 to $2,500. SBC Americas reported that the company prepared a 70-page legal white paper and shared it with regulators. OG.com followed eight days later and says its rips product sits outside CFTC oversight, per SBC Americas. Crypto.com launched Crypto.com Rips on Nov. 9 with MLB, NBA, NFL and Pokémon packs and what the company calls a "100% buy-back guarantee" at a locked-in price. Coinbase has teased a product but had not announced a launch as of this week.

FanDuel remains on the sidelines. According to Covers, it is testing demand by giving Rewards Club members access to Arena Club rather than building its own product.

What operators should take from week one

Three points stand out. First, distribution is moving to companies that already hold sports bettors and traders. That makes rips a customer acquisition and retention tool as much as a collectibles business. Second, the legal position rests on physical backing. Bank of America said legal experts it consulted believe the category is on solid footing as long as cards stay backed by real inventory, and it expects scrutiny to increase as the category grows. Third, that scrutiny has not yet arrived. Current and former regulators told SBC Americas they have not examined rips closely and are focused on prediction markets. No state has challenged rips as gambling, and no court has ruled on the question.

For licensed operators and suppliers, this gap is both an opportunity and an exposure. Each platform currently sets its own inventory audits, pricing checks and age and identity controls. Companies that adopt verifiable standards early will be better placed when regulators act.

Next in this series: Fanatics' Vertical Advantage: Topps, the Vault, and the Auction House, on why owning the card, the grade and the marketplace compounds.

Source reporting: Sportico (citing Bank of America), SBC Americas, Covers, PrizePicks and Crypto.com company announcements, Barron's via Sportico.