Leon Xiao argues regulators are failing to enforce existing gambling laws against trading card packs, as increasingly expensive products, card breaks and repacks blur the distinction between collecting and gambling.
Photo courtesy of Leon Xiao
Physical trading cards have traditionally occupied a very different regulatory category from sports betting or casino games. But Leon Y. Xiao, Assistant Professor at City University of Hong Kong and Visiting Research Fellow at King’s College London, argues that the distinction is becoming increasingly difficult to justify.
Xiao researches video games, gambling, advertising and consumer protection law and policy. His recent study, published in the Journal of Behavioral Addictions, examined 50 physical trading card game and collectible sports card packs in Hong Kong.
The researchers found 80% provided no probability disclosures on their packaging, while the remaining 20% provided information that was incomplete and, in some cases, difficult to find or potentially misleading. No pack disclosed the probability of obtaining every individual card.
But the transparency question forms part of a wider issue. High-value “chase” cards, more expensive collector products, card breaking and repacks are increasingly raising questions about where collecting ends and gambling begins.
Gambling Insider spoke with Xiao about the gamblification of collectibles, why he believes many card products already satisfy legal definitions of gambling and whether regulators need to go further than probability disclosures.
This interview has been edited for brevity and clarity.
‘Card Packs Should Constitute Gambling’
Gambling Insider: Your research describes physical card packs as “gambling-like products.” At what point does a gambling-like collectible actually become gambling, either behaviourally or in regulatory terms?
Leon Xiao: According to a common-sense definition, if people are risking money in exchange for a random result, some of which they will be happy with but others that they will be unhappy with, then you have gambling.
As to regulation, the legal definition varies across jurisdictions, but generally it is required that someone risks money on a random event with a chance of winning something with real-world monetary value.
Card packs should constitute gambling under both the common-sense definition and the legal definition, but regulators are not enforcing gambling law properly. So, in practice, card packs are not currently regulated as gambling, which is why we called them “gambling-like.”
Collectibles Are Becoming More Expensive
GI: Card packs are becoming more gambling-like through high-value “jackpot” cards, expensive collector editions and scarcity. Are we seeing a broader gamblification of the collectibles market, and what is driving that shift?
Xiao: Yes, we are definitely seeing this trend whereby products are becoming more expensive.
However, it’s difficult to identify any particular causes. One might suggest that there is increased popularity and demand, and so an influx of money, particularly from adults rather than children, during and following Covid.
Card Breaks and Repacks May Carry Greater Risks
GI: How does the growth of online card breaking and repacks change the picture? When consumers pay for a team, slot or share of a box opened by somebody else, or buy mystery repacks containing potential “chase” cards, does that move the activity closer to conventional gambling?
Xiao: My opinion is that these products, including the original card packs, are gambling according to the legal definitions of most jurisdictions.
One may argue that card breaking and repacks are riskier because more money is risked than with normal packs and so the potential harm is greater.
There are also concerns about fraud, for example, whether repacks are fair and whether they actually contain the rare cards they claim to offer.
The Company Behind the Product Should Not Determine Regulation
GI: We’re increasingly seeing gambling or gambling-adjacent technology and business models intersect with collectibles. If betting, sweepstakes or prediction-market companies move into card breaking or similar products, does that change how regulators should view the activity?
Xiao: I don’t think the business entity behind the product is necessarily relevant here. Any business offering illegal gambling products should be duly prosecuted.
A traditional gambling business entering this scene may indicate popularity and shifting consumer demand.
Where Should Regulators Draw the Gambling Line?
GI: There’s a wider debate about gambling mechanics spreading into areas that historically weren’t considered gambling. Do card packs, breaks, loot boxes and blind boxes support that argument, or is there a danger of stretching the definition of gambling too far? Where would you draw the line?
Xiao: The current line being drawn in law is whether the prizes can be transferred to a third party and thus possess real-world monetary value.
To be practical, this is a reasonable line to draw, but it is not currently properly enforced. So products that satisfy the current definition are not being regulated as gambling.
One may argue that the line could be redrawn to be more nuanced and recognise products that do not satisfy the current legal definition but may be demonstrably more financially harmful, such as loot boxes, and also exempt products that currently meet the definition but are demonstrably not obviously risky and harmful, such as blind boxes.
‘Probability Disclosures Are Not Enough’
GI: The study found widespread shortcomings in probability disclosures, while children can readily buy many of these products. Should regulators simply require greater transparency, or do developments such as breaks, repacks and increasingly valuable chase products suggest that stronger regulation is now needed?
Xiao: Probability disclosures are not enough. Providing them is likely required under pre-existing consumer law and is a bare minimum.
More enforcement action is urgently needed for the other issues identified, particularly to protect children.
