Cards
Whatnot lawsuit could mean big trouble for breakers, help protect collectors
One of the largest and most profitable card breaking and repack companies in the hobby is facing legal trouble.
Whatnot—which dubs itself as a livestream shopping platform—had 15 arbitration claims filed against it recently by consumers. The company is under the microscope for allegedly running an illegal gambling operation.
Since being founded in 2019 by Grant LaFontaine and Logan Head, Whatnot has become a juggernaut in the space. In October 2025, the company had a valuation of $11.5 billion following a funding round.
According to the plaintiffs’ attorney, Paul Lesko of St. Louis-based Lesko Law LLC, the way Whatnot runs its randomized breaks and repack breaks violates contest, lottery and sweepstakes law. The claims were laid out in a 132-page complaint that was released on Monday.
Known as the “Hobby lawyer” by many in the industry, Lesko is a collector himself. He has watched the breaking space explode over the last few years.
Prior to and at last year’s National Sports Collectors Convention in Rosemont, Ill., Lesko was approached by some users of Whatnot. They had lost significant amounts of money on the website and had concerns on how Whatnot was running its business.
“They initially went to Whatnot thinking it was a marketplace, that’s how it’s advertised,” Lesko told SCD. “It was a place to go and buy baseball cards. That’s what they thought it was. But you get there and then really quickly with the wheelspins and everything else, you realize it’s something else. By the time [the consumers] had gotten into the breaks and bought in and won some cards, lost some cards, things like that, they found out they were addicted to it.
“It was not anything that they were trying to do for fun anymore. They were just actually trying to win spots, and they get the dopamine rush at that. Some of them even hate the cards now. They sell them back all the time. You get the cards, they sell them back. If they get them physically, it’s a problem for them. Then they have to sell them to support their habit.”
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Lesko started looking into Whatnot’s practices and determined what it is doing is illegal in California, where Whatnot considers its home base.
“It’s our belief that the way Whatnot runs its randomized breaks and the way that it does its repack breaks, it’s violative of contest, lottery and sweepstakes law,” Lesko said. “The repacks themselves are additionally illegal, because under California law—which when you’re agreeing to terms of service, you’re agreeing to California law—it outlaws what is called a prohibition on sports card grab bags, which we believe is a direct read on repacks.”
Lesko noted these operations are supposed to be regulated because of the casino style nature of the gambling. In addition, Whatnot doesn’t have controls in place that can protect a consumer and allow them to participate not at risk.
“There’s no ability to self-ban,” Lesko said. “If you go to a casino nowadays or go on DraftKings or anywhere else, you can request to be banned from their website, and they will make steps to make sure that you’re banned. There are spending limits that you can set, and you can’t change them. Sometimes you have to give the password to a third-party and only the third-party can change your spending limits. And there’s no addiction support at Whatnot, either. Beyond that, because they don’t have these consumer safeguards, there is a lot of room for breakers to get away with bad acts—such as leaking cards from repacks to other people and shill bidding, things along those lines.”
WHATNOT RESPONSE
Whatnot released a statement on Monday refuting the allegations.
“We absolutely reject the characterization in this complaint. Gambling isn’t allowed on Whatnot, and we strictly enforce this policy,” the company statement read.
“Whatnot is a commerce platform built to support small businesses, connecting them with buyers who purchase products they love. 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% 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.”
The company has faced intense scrutiny for not monitoring and properly policing some of its more unsavory breakers, who have faced accusations of shill bidding and running scams. It faced a major controversy last year when one of its top breakers engaged in offensive and highly inappropriate behavior during a live break. After a brief suspension, the breaking company was reinstated and continues to conduct live breaks on the site.
Whatnot can’t be sued because it has an arbitration clause in its contracts. However, not long ago, Whatnot tried to change its arbitration agreement.
“The way it’s supposed to work is people give up the right to sue through the terms of service,” Lesko said. “You do it all the time, you can have your right to sue in court, but you agree that a private arbitrator will hear the issue. Normally, the problem is arbitrators need to get paid for this. Up until now, the way it’s been set up is that the consumer, all they have to pay is the filing fee, which is like $225, and then after that, the business, they pay the fees for the arbitration. That’s what the consumer’s supposed to get as part of the deal. They give up their right to sue in court in an open public proceeding. However, if you want privacy, you’ve got to pay for it.”
Prior to filing the arbitration claims against Whatnot, Lesko reached out to the company last October to see if it was interested in negotiating. Whatnot didn’t want to go that route, and everything broke down around early March.
“That’s when Whatnot changed their arbitration agreement,” Lesko said. “And their new arbitration agreement basically says, ‘Oh, we’ll split the fees with you,’ meaning it’s not just $225 and we’re off to the races and Whatnot pays for everything. Now it’s potentially a 50/50 split, which could seriously impact the number of cases that Whatnot could see.”
There is now a 30-day opt-out period that Whatnot provides on its new arbitration agreement.
“We think it’s invalid, but you have to have arbitration to even have it shot down,” Lesko said. “So, you still have to pay money to get it even shot down. Rather than do that, that’s why we went public and we’re encouraging everybody, no matter what they want to do, if they want to go with this case, that’s fine. If they don’t think they want to go with this case, just be apprised of your rights. Look at the old agreement, look at the new agreement, see which one you like better and send in the opt-out form, if you want, because by April 3, if you don’t, Whatnot will make that decision for you.”
MORE CASES COMING
When word of the arbitration claims started to spread on social media, Lesko’s phone was ringing off the hook from disgruntled Whatnot customers.
Lesko had already filed 15 arbitration claims and had 15 more to go. He figures by the end of this week he will have 100 clients signed up with viable cases against Whatnot.
Lesko is actively accepting clients for arbitration; he can be reached at paul@leskolawllc.com.
A typical arbitration case that doesn’t end in a settlement can stretch 12 to 18 months. Since arbitration is private, whatever happens in the cases might never be announced.
“Unfortunately, nowadays, 90% of all cases that settle, settle confidentially, and the arbitration process doesn’t help that,” Lesko said. “There’s a chance that everything could go into arbitration and disappear and nobody ever hears about it ever again.”
Whatever the outcome of the cases, Lesko is hoping a change for the good will ensue in the hobby.
“The way I view it is it’s really more so just changes for Whatnot,” Lesko said. “My clients haven’t had problems with anyone else that’s out there. Whatnot’s the only one they’ve ever mentioned.
“We’re not trying to shut down all repacks. We’re not trying to shut down all randomized breaks. The way that they’re run on Whatnot with a lack of consumer protection, that’s what we’re focused on. We’re not trying to shut down Whatnot, either. We want them to make improvements and make the experience safer for consumers.”
