Texas Lottery remains in lawmakers’ sights despite move to ban third-party sales of tickets

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The Texas Lottery Commission’s executive director said Monday he would move to ban couriers from buying lottery tickets after finding that state law bars the practice, an about-face from the agency’s yearslong claim it had no control over such third-party sales that was met by skepticism from senators at a hearing.

Since 2016, the commission has maintained to retailers and lawmakers it lacked authority to regulate couriers, which allow customers to buy lottery tickets remotely. But in a policy statement on Monday, the agency said it now views the practice as illegal and will revoke the lottery license of any stores that sell tickets to a courier. The shift comes just days after one of the state lottery commissioners resigned and as public safety officials are investigating at least one courier for criminal activity after recommendation from lawmakers.

Executive Director Ryan Mindell said in a statement the commission’s new crackdown comes after a review of state law and information from “retailer investigations.” He said he would formally propose the new rule at the agency’s March 4 board meeting.

“Lottery courier services operating in Texas have been a significant concern for many of our stakeholders,” Mindell said in the Monday statement. “Since I became executive director less than a year ago, I have been keenly focused on making changes to improve the public’s perception of Texas Lottery games and how they are played and operated.”

Criticism of the lottery commission has not slowed in light of the new guidance, and commission officials including Mindell faced hours of questioning from legislators in both chambers over couriers’ proliferation. Among those critics was Lt. Gov. Dan Patrick, who was not present during the hearings Monday but personally investigated an Austin store where a courier purchased a ticket earlier this month for a resident who won an $83.5 million Lotto Texas jackpot.

Patrick, who oversees the Texas Senate, said the new changes to the commission’s rules on couriers would not end his office’s investigation or the upper chamber’s pursuit of a law banning couriers outright. He also blasted Mindell’s statement, saying he had “never read so much garbage from a state agency press release in my 18 years in office” while framing it as too little, too late.

“Today's action is an obvious admission that the Texas Lottery Commission had the oversight authority all along and allowed these businesses to creep into Texas and undermine the integrity of the Texas Lottery,” Patrick said in a Monday post on X about the commission’s new guidelines.

Gov. Greg Abbott joined the fray just before the Senate hearing, announcing Monday afternoon he had directed the Texas Rangers — a division of the state’s Department of Public Safety — to investigate the recent jackpot win. Abbott also told the agency to look into a prior $95 million jackpot won in Colleyville in April 2023 by a foreign group that spent millions to make bulk ticket purchases in a way that all but guaranteed a win.

Mindell revealed during a Senate State Affairs Committee hearing Monday that Winner’s Corner — the top-selling retailer that partnered with a courier to sell the $83.5 million ticket and the subject of Patrick’s investigation — was issued a violation over its courier practices. Mindell said the business had over 16 lottery terminals that print tickets.

But later in the hearing, a representative with IGT Solutions, the company that provides the terminals, said that as of Monday morning, Winner’s Corner was in possession of 47 terminals.

Officials said most of the over 21,000 licensed storefronts need only one machine, and Mindell said that beginning Monday no retailer would be allowed to have more than five terminals. Winner’s Corner’s excess machines were seized by the commission after the new guidance went into place.

Mindell’s appearance at the State Affairs Committee hearing Monday was part of a review for Senate Bill 28, the chamber’s proposal to ban couriers co-authored by a majority of senators. During the hearing, Mindell also said the same group that won the 2023 jackpot and is now under investigation attempted another bulk purchase of tickets in December of 2024 but was blocked by officials after suspicious activity was flagged.

Greg Potts, a lawyer for Lottery.com, a courier site that helped facilitate the 2023 jackpot win, confirmed the company and its previous executive management are under investigation by the U.S. Department of Justice. Potts testified at the hearing and explained the relationship Lottery.com had with the commission in the run-up to the jackpot.

Senators said public knowledge of the second attempt was a “bombshell” and that commission officials should have notified lawmakers more immediately, and was further evidence the mass purchases could be signs of money laundering.“This is a blockbuster you did not tell us about at the finance committee,” Sen. Paul Bettencourt, R-Houston, said during the hearing.

Lottery officials have since put a restriction on how many tickets lottery terminals can print in a single day, Mindell said during the Senate hearing. But before that restriction, Potts said Lottery.com was made to understand the commission was fine with the company and the other groups maintaining the dozens of lottery machines necessary to print the 25 million ticket combinations.

“We fully expected that they would laugh at us and say, ‘Well, no, of course you can’t do this,’” Potts said during the hearing. “We only did it after we were told we were able to move forward legally, under the lottery license we had, and do this project.”

State law requires lottery tickets to be bought in person, but couriers circumvent this process by having customers pay them to buy and send a picture of the tickets, creating a remote option for play. Couriers cannot be directly licensed to sell tickets, but most are also partnered with brick-and-mortar stores that are licensed, and “almost always,” in some cases, are owned by the same entities and operate in the same building, Mindell said during the Senate hearing.

In the case of the 2023 jackpot, the groups used QR codes to rapidly scan combinations into the machines, allowing the massive undertaking of printing 25 million tickets to occur. According to Hall and Potts, workers were also called in to help facilitate the process.

The commission’s guidance outlined 13 different provisions of state law they believe couriers circumvent, including bans on sales to minors and lottery officials as well as restrictions on influencing a drawing’s outcome. Mindell said during a House budget hearing Monday that the commission’s guidance would be complementary to any laws passed by the Legislature if they wanted to criminalize couriers in addition to prohibiting them.

The commission also requested an opinion from the state attorney general’s office on Feb. 14 to determine their level of authority over couriers. It said official rules banning the use of couriers would be adopted by April.

Mindell told lawmakers in both chambers Monday that he moved to ban couriers based on feedback from Senate lawmakers at another recent budget hearing, along with findings from the agency’s own investigations.

“We received that direction from the Legislature. We also had information — credible information — from our investigations, that said we need to take action now,” Mindell said. “And so, that's why I issued that policy statement.” He added that he is taking the rule to the lottery commission board “to say that we need to make sure that we can stop this activity.”

Rep. Brian Harrison, R-Midlothian, questioned Mindell’s framing, telling him the Lottery Commission should not be making policy decisions based on comments from select lawmakers at committee hearings. The Legislature “speaks when we pass and enact statutes and statutory language,” Harrison said.

“That's what governs the commission, what's been governing you for a long time,” he continued. “To put the question just super simply, you have the exact same authority this morning that you had when the commission, more or less from its inception. Why did you not take these regulatory actions a long time ago?”

Rep. John Bucy III, D-Austin, also filed a bill Friday in the House that would create a state licensing system for couriers. While 18 states have laws regulating couriers, only three have courier licensing programs. The Coalition of Texas Lottery Couriers, which represents the three largest couriers in the state, said they would work with Bucy and others to find ways to responsibly implement the practice. Couriers contribute over $173 million in lottery ticket sales, according to a Legislative Budget Board estimate, but lottery officials said Monday the exact number is unknown.

“Issues such as facilitating bulk purchases, the international distribution of Texas Lottery games or underage orders cannot be tolerated,” the coalition said in a statement Monday. “The public’s trust and confidence in courier operations and the Texas Lottery must be honored, and we look forward to working with Rep. Bucy to advance this bill.”

The coalition sent several representatives to speak at the State Affairs meeting who were questioned extensively about their businesses’ operations in Texas. Jackpocket, the courier that owns Winner’s Circle, sent Peter Sullivan, their former CEO and founder, who assured senators he was in contact with the winner of the ticket, a longtime Texas resident.

Sullivan also shed some light into the financial impact of couriers in the state, saying that Jackpocket alone made $550 million in sales over the last five-year period. The representatives also pointed out that all of the coalition’s member organizations are licensed in states with licensing programs, which require them to undergo criminal background checks among other safeguards.

Senators were skeptical despite the coalition’s testimony, and Hall said the representatives “shot themselves in the foot” by displaying how they have found workarounds in Texas law to do business. When asked to name a provision of law permitting courier sites to sell scratch-off tickets, Sullivan responded “there’s nothing that prohibits it,” prompting frustration from Sen. Mayes Middleton, R-Galveston.

“‘It doesn’t say we can’t do it, so we’re going to do it’ — I mean, that’s a pretty lousy way to operate a government,” Middleton said during the hearing.

Texas law requires stores sell items other than lottery tickets, and the coalition admitted the courier-affiliated retail stores they operate would likely not be in business without their lottery components.

Hall ended the six-hour discussion of SB 28 at the Senate hearing by urging Abbott to issue an executive order immediately terminating the lottery commission and expanding the scope of the Texas Rangers’ investigation. The senator also said the commission’s inability to reliably govern the lottery could reflect on efforts to increase other gaming opportunities in the state, like casinos.

“I think the biggest message to come out of this is Texas is not open for gambling,” Hall said.

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