Hasbro Faces Shareholder Lawsuit Over Alleged Magic: The Gathering Overprinting Strategy

PAWTUCKET, R.I. — Hasbro, the global toy and entertainment conglomerate, is facing a significant legal challenge from within its own investor ranks. A federal shareholder derivative lawsuit, filed in the U.S. District Court for the District of Rhode Island, alleges that company executives orchestrated a strategy of overprinting its flagship trading card game, Magic: The Gathering, to artificially inflate revenue, ultimately harming the brand's long-term value and deceiving the market.

The 76-page complaint, lodged by shareholders Joseph Crocono and Ultan McGlone, names CEO Chris Cocks and 13 other officers and directors as defendants. It centers on claims that from at least 2021, Hasbro leadership "overloaded the market" with Magic card sets to generate cash flow and offset underperformance in other product lines, all while publicly attributing growth to savvy product segmentation and player engagement.

Magic: The Gathering, acquired by Hasbro in 1999 for $325 million, has evolved into the company's financial powerhouse. In 2023 alone, it generated approximately $1.1 billion in net revenue. The lawsuit pinpoints 2016—when Cocks was appointed president of the game's subsidiary, Wizards of the Coast—as the beginning of a "meteoric rise" for the division.

However, the plaintiffs contend this growth was fueled by a covert "parachute strategy." Citing testimony from a former Wizards employee labeled "FE 1," the suit alleges the company began overprinting cards as early as 2018, creating special sets designed to generate $40 to $80 million specifically to cover shortfalls elsewhere in Hasbro's portfolio. By 2022, these supplemental sets allegedly comprised 46% of all Magic releases for the year.

The complaint argues this practice devalued existing cards—a critical concern for a game with a vibrant secondary market—and created an unsustainable bubble. It highlights the controversial 2022 release of the *Magic 30th Anniversary Edition*, a $999 booster box containing cards not legal for tournament play. While reportedly selling out online in under an hour, an anonymous employee claims sales were halted early to conceal disappointing numbers, with unsold inventory allegedly later seen in a Texas landfill.

The alleged strategy began to unravel in 2023. Hasbro announced a 27% inventory reduction alongside a 34% drop in consumer demand for its Wizards segment, news that precipitated a 16.3% stock decline. The lawsuit further claims Hasbro repurchased $125 million of its own stock at "artificially inflated prices" in 2022, overpaying by an estimated $55.9 million due to the misleading financial picture.

Andrew Spacone, a professor at Roger Williams University Law School and former corporate counsel, reviewed the filing. He noted the suit's unusual inclusion of a federal securities fraud claim under Rule 10b-5, alongside traditional breach of fiduciary duty allegations. "This is a very curious lawsuit," Spacone said. "Normally, a fiduciary duty lawsuit stands on its own. They may believe they can get a more receptive audience in federal court." He speculated the plaintiffs' ultimate goal is likely a settlement.

Hasbro and plaintiffs' counsel did not respond to requests for comment. The company's stock, notably, hit a 52-week high this week, closing at $90.46 per share.

Community Reaction

The lawsuit has sparked intense discussion among investors and players alike.

Marcus Chen, Portfolio Manager at Heritage Trust: "This case hinges on the definition of 'overproduction.' Hasbro has a duty to maximize shareholder value, and if Magic was the only division meeting targets, leveraging its strength could be seen as prudent resource allocation. The key question for the court is whether disclosures were materially misleading."

Eleanor Vance, Long-time Magic Collector & Store Owner: "It's infuriating but not surprising. For years, the player base has complained about product fatigue and reprints tanking card values. If these allegations are true, it shows a blatant disregard for the collectors and players who built this game's ecosystem, treating it purely as a short-term cash cow. They've eroded trust, and that's bad for the game's long-term health."

David Park, Retail Analyst at Finley & Co.: "The lawsuit exposes the inherent tension in managing a collectible game as a public company. You must balance driving quarterly revenue against preserving the scarcity that underpins collectible value. Hasbro may have leaned too far into the former. The inventory and demand figures from 2023 suggest the market is pushing back."

Rebecca Shaw, Former Hasbro Marketing Executive: "The 'parachute strategy' allegation, if proven, reflects a dangerous corporate mindset. Using your crown jewel to paper over cracks in other divisions is unsustainable and risks the jewel itself. It points to potential deeper issues in portfolio management and innovation beyond the Magic brand."