Whatnot’s live shopping app is now facing more than 70 claims over whether “card breaks” are illegal gambling

Whatnot has turned a live-shopping format into a serious money machine: a $20 billion valuation, more than $8 billion in merchandise moved in 2025, and a user experience built to keep people bidding. The catch for PSPs and platform risk teams is that the same mechanics powering engagement are now being tested in US courts as a possible illegal lottery.

1. Whatnot closed a $545 million Series G round on 7 August, taking its valuation to $20 billion from $11.5 billion ten months earlier. The platform says it moved more than $8 billion in merchandise in 2025, more than double the prior year, and added more than 20 million accounts that year alone.
2. In a video interview cited by the source, Wall Street Journal reporter Hannah Krueger said the average user spends about 95 minutes a day on the app, roughly the same as TikTok, and that annual revenue is approaching $1 billion. The product design is built around instant action: users land directly in live auctions, bids are placed with a swipe, and after a win there is no confirmation screen for price or shipping address before the next item appears.
3. The most sensitive format is the so-called “card breaks.” In these sessions, a sealed box of collectible cards is split into paid “slots” and opened live. Someone paying $1,000 may end up with a $20,000 card or a $20 card, which is exactly the kind of payment-plus-chance structure plaintiffs are trying to classify as gambling.
4. In March 2026, attorney Paul Lesko announced 15 arbitration demands on behalf of more than 30 clients against Whatnot. He says the cases rely on California Penal Code section 319, which defines an illegal lottery through three elements: payment, chance, and prize. Since then, he has filed claims on behalf of more than 70 people, arguing that the breaks operate as an illegal lottery and that part of what happens on the platform amounts to fraud.
5. Lesko also argues that Whatnot does not provide the protections required of licensed digital casinos, such as self-exclusion or effective spending limits. There is also a public whistleblower case under California’s False Claims Act accusing Fanatics Live and Whatnot of operating unlicensed lotteries through random breaks; the California Department of Justice declined to intervene. No US regulator or attorney general has publicly said whether the breaks count as gambling, and the California Gambling Control Commission says that determination belongs to the attorney general.

One procedural detail matters here: the arbitration claims are governed by a March 2026 update to the Terms of Service, which imposes ar...