Whatnot Faces Arbitration Claims as Legal Challenges Mount Over Trading Card Breaking Practices
Live selling platform Whatnot is facing multiple arbitration actions as legal challenges against trading card breaking and repacking practices pile up amidst allegations the platform is running what amounts to an illegal gambling operation.
The complaints, filed by plaintiff's attorney and hobby enthusiast Paul Lesko, gained public attention today with multiple clients already represented and more likely joining soon.
Danny Black
Lesko told Collectibles on Sports Illustrated:
"Today we are announcing that we have filed 15 arbitrations over the last few days and will continue filing them for our clients (we currently have 15 more to go).
Our cases focus on Whatnot allegedly running an illegal casino without the safeguards that regulated casinos are required to have to protect consumers. Due to those lack of safeguards, we believe consumers are at risk of unfair and fraudulent activities as well as addiction issues without the proper guardrails."
The suggestion that Whatnot is running an illegal gambling operation raises serious questions about oversight and consumer welfare, particularly around how Whatnot manages its sellers with "Premier Shop" status. These sellers are supposed to be the best of the best, but the complaint claims Whatnot often allows them to engage in allegedly unfair business practices.
According to the filing, Whatnot has also historically prioritized platform growth over protecting the hobby, often failing to hand out permanent bans even when these issues come to light - allegations that are echoed by many buyers across social media and forums.
It's important to note this is not a class action nor is it technically a lawsuit - Lesko is simply representing clients who are going through the arbitration process as outlined in Whatnot's Terms of Service.
Corporations often prefer to direct user disputes through arbitration in their Terms of Service because it allows details to stay private, unlike in a lawsuit where filings, exhibits, transcripts, and rulings could all potentially be on the public docket.
That arbitration agreement is one of the main reasons Lesko says he is going public about the arbitration claims now, as recent changes to Whatnot's Terms of Service could negatively affect users' ability to pursue action in the future.
In an interview with Sports Card Clubhouse, Lesko explains that the new terms would require users to split the costs of arbitration with Whatnot, whereas the old terms followed the more commonly accepted structure with the user paying an initial filing fee and the company being responsible for arbitration costs.
Lesko says the new terms have a 30 day opt out period from March 4, 2026 and is encouraging all Whatnot users to review the changes to the arbitration section carefully to decide if they wish to be governed by the new terms or opt out before the deadline.
While Whatnot does not appear to post the previous terms on their site for comparison, they can still be viewed through the Internet Archive Wayback Machine - this link shows the terms as they were on February 11, 2026.
The current terms can be found here:
And here is the applicable information about opting out:
30-Day Right to Opt-Out
You have the right to opt-out and not be bound by the Arbitration Agreement by sending written notice, signed by you, of your decision to opt-out to arbitration@whatnot.com or by mail to Whatnot, Attn: Legal, 2261 Market Street, Suite 10754, San Francisco, CA 94114 (the “Notice Address”).The notice must be sent within 30 days of the date posted at the top of these Terms or your first use of the App, whichever is later; otherwise, you shall be bound to arbitrate disputes in accordance with the terms of the Arbitration Agreement.
If you opt-out of the Arbitration Agreement, Whatnot also will not be bound by the Arbitration Agreement with respect to disputes brought by you, and you and Whatnot may exercise your right to trial by judge, as permitted by applicable law.
If you opt out of the Arbitration Agreement, you will not be opting out of any other provisions of these Terms and you agree to be bound by all other provisions of these Terms, which shall remain in effect as allowable by law.
If you and Whatnot previously agreed to arbitrate disputes related to the App, the prior agreement to arbitrate disputes will continue to apply if you opt-out of this change.
Many hobby enthusiasts are wondering if these claims could also eventually include or impact other platforms like Fanatics Live and eBay Live.
Lesko was quick to say that this current action is limited to certain practices and customer experiences on Whatnot and that the goal is to get Whatnot to do better, not necessarily to pursue new laws, regulations or judgements affecting the hobby, breaking and repacking more broadly.
Specifically responding to questions about Fanatics and eBay, Lesko noted stricter seller vetting as a key difference he believes sets those platforms apart from Whatnot.
Whatnot provided the following response to SI, saying they reject the allegations contained in the arbitration complaint.
"We absolutely reject the characterization in this complaint. Gambling isn't allowed on Whatnot, and we strictly enforce this policy.
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."
