The Texas Lottery Commission unanimously voted Tuesday to ban lottery courier companies from selling tickets online amid lawmakers’ ongoing criticism of the practice. The vote was an about-face for the agency, whose officials previously claimed the commission could not regulate the services.
Couriers are third-party services that sell lottery tickets through websites or apps, then print and scan the tickets at licensed lottery retailers that they usually also own. The businesses have operated in Texas for almost a decade, but have recently drawn legislators’ ire. Lawmakers fear such online sales enable illegal purchases by out-of-state or underage players.
The ban allows the commission to immediately revoke the lottery license of any retailer that knowingly assists or works with couriers. Lawmakers are currently weighing legislation that would impose similar restrictions.
Sergio Rey, the commission’s acting deputy executive director, said the agency’s administrative branch would immediately begin enforcing the new rules.
Lawmakers and other state officials are pursuing legislation and investigations based on two central issues: the proliferation of third-party lottery ticket couriers and a $95 million jackpot in 2023 won by a single group buying out almost every possible ticket combination.
Attorney General Ken Paxton’s office and the Texas Rangers, a division of the Department of Public Safety, are each currently conducting investigations into the lottery’s relationship with courier services.
Amid the mounting scrutiny, Ryan Mindell resigned as the commission’s executive director last week. Commissioner Clark Smith resigned in February.
Ticket sales from couriers collectively make up less than 10% of the lottery’s revenue. But the companies’ ability to market to a wider digital audience has allowed some couriers to individually outsell specific traditional retailers, like local convenience stores. Stores operated by Jackpocket and Lotto.com, the nation’s two largest couriers, collectively sold over $226 million in tickets through 2024, while the top five traditional retailers collectively sold $34 million.
Lotto.com filed a lawsuit less than a week before the lottery commission’s decision asking a judge to block the rule from being approved. There has been no ruling on that request.
Lawmakers, including Lt. Gov. Dan Patrick, have also criticized a practice called bulk purchasing, which occurs when nearly all of a lottery game’s possible combinations are purchased by a single entity for an almost-guaranteed win. In April 2023, an overseas group worked with several retailers and one lottery courier service to buy 99% of the nearly 26 million ticket combinations, winning a $95 million jackpot.
In news releases, interviews and public testimony in the Legislature, courier representatives have said their apps and websites have verification procedures that prevent illegal sales like bulk purchases and sales to minors. State law, however, does not currently require such verification processes, meaning those with security measures did so without oversight and at their own discretion.
The Texas Senate in February unanimously passed a bill that would criminalize any form of online lottery ticket sales. State Sen. Bob Hall authored Senate Bill 28, but the Edgewood Republican said the ban doesn’t go far enough. He said the entire lottery needs further regulation — and maybe needs to be abolished.
“That was filed before we knew how bad it really was, when I was just thinking, ‘if we just get rid of the couriers, we solve the problem,’” Hall said. “Since then, the couriers are just symptomatic of what the problem is.”
Hall said lottery officials enabled couriers to operate in the state despite state law, and that the businesses’ practices conflict with the spirit of the lottery’s original intent to be played in-person. Current state law says the lottery cannot be played by “telephone.”
The lottery commission is currently on the chopping block. The House passed a proposed state budget that stripped the agency of all of its funding. The state lottery annually provides about $2 billion to public schools and tens of millions to veterans’ programs. The House and Senate are currently working out their differences on the mammoth state budget behind closed doors, so it’s not yet clear whether the Legislature plans to defund the commission or how it would mitigate revenue losses to schools and veterans’ programs.
The investigations and legislative scrutiny come at the same time that the agency is under a routine review by the Texas Sunset Advisory Commission, which evaluates the performance of state agencies and makes legislative recommendations about their operations. Because the lottery commission is currently under that review, lawmakers this year must vote before the end of the legislative session to continue its existence.
Credit: by By Ayden Runnels, Texas Tribune