The Texas Lottery Commission (TLC) was heavily criticized on Wednesday by the Sunset Advisory Commission.
Following a report released in May on issues with the TLC, the committee held a meeting with the lottery’s top representatives on Wednesday. The TLC was told it was not doing its job to handle couriers and protect youths from playing the lottery through online means.
TLC Chairman Robert Rivera and Executive Director Ryan Mindell appeared before the Sunset Commission in response. They believe the lottery is doing its part to maintain the integrity of sales.
Texas is not among the states with online lotteries. However, five different couriers operate in the state. Those couriers offer online purchases of retail lottery tickets. All offer draw game sales, while a few provide scratch ticket sales, as well.
When it comes to couriers, the TLC says it is seeking guidance from legislators on further action.
The Sunset Advisory Commission didn’t take that response well, with many representatives believing the TLC was willingly ignorant of the issues and letting them happen under its nose. Chair Keith Bell made it pretty clear that if the TLC doesn’t address the problem, the Sunset committee will:
“We’re about coming up with solutions, right? So, make a recommendation to us what you think that looks like, or we won’t have any problem making one for you. I can assure you that my colleagues will get that done.”
Courier services tiptoe around pair of legal statutes in Texas
At the core of the courier issue in Texas is a pair of key legal topics.
In 1993, it was established that the lottery commission shall adopt rules to enforce its prohibition on a person playing a lottery by phone.
While there could be a legal gray area when it comes to an app on a phone being considered “playing by phone,” that was stressed by the Sunset Advisory Commission on Wednesday.
Also, Texas law states that you can’t purchase lottery tickets via credit card. In fact, it’s a Class C misdemeanor.
Couriers are able to take purchases through cards, obviously being an online company.
Mindell stated that the TLC doesn’t accept lottery purchases through credit cards. However, he can’t control how a courier receives its payment if that company then goes and buys the retail tickets through legal means.
“I want to be clear that the Texas Lottery Commission does not sell any tickets directly to players. We only work through our 21,000 licensed lottery retailers. They have a variety of methods of sale and how they accept payment. The restriction is they cannot sell lottery tickets with credit card. If we found any evidence that any Lottery retailer was selling lottery tickets by credit card, we would revoke their license.”
There appeared to be an issue with the understanding of the couriers and the TLC’s role with them. The couriers aren’t retailers and, therefore, have no oversight from the TLC. They take online purchases from customers and legally buy retail lottery tickets for said customers.
Mindell stated during questioning that the TLC doesn’t work directly with couriers, nor would it license any as a retailer.
That contradicts what Jackpot.com CEO Akshay Khanna told PlayiLottery just weeks ago. We asked Khanna about the courier’s relationship with the states it operates in:
“We have never entered a state where we haven’t received either explicit or implicit approval from the needed regulatory or oversight bodies. We work hand in hand with the state lottery every step of the way.”
Couriers aid in Lotto Texas jackpot takeover
One of the issues discussed was an event that took place in April 2023. A private partnership called “Rook TX” was alleged to purchase every possible outcome of a Lotto Texas drawing that had a $95 million jackpot. That meant buying nearly $26 million in tickets at $1 each.
In order to complete this purchase, the group utilized multiple couriers to print off all the different tickets.
Some of these couriers created their own retail store locations where they received approval from the TLC to sell tickets. That allows them to install banks of printers to accommodate large purchases.
Colleyville’s Lottery Now, which sold the winning ticket, handled nearly 11 million tickets for that drawing alone.
It did this by only purchasing Lotto Texas tickets and adding in over a dozen printers ahead of the drawing. Following the winning drawing, the store dialed back to just three printers.
Mindell denied that the TLC had any contact with the group making the large purchase. However, he believed that the TLC still operated as directed and ensured fairness in this situation.
“I don’t believe that it compromised the integrity of the game. Every player that played the game for that jackpot draw had the same 1-in-25 million-and-change chance of winning that jackpot, and the draw processes were not affected on our side. In other words, the game was conducted fairly, and everybody had the same chance of winning.”
Representatives wholeheartedly disagreed with Mindell’s assessment that the integrity of the game wasn’t impacted, led by Rep. Matt Shaheen.
“I’m shocked that you don’t think there’s an integrity issue. So let me assure you, there is. You collaborated with a group of sophisticated players, and a significant percentage of the lottery sales in Texas there’s low-income individuals, and I think they were taken advantage of.”
Mindell did note that the commission is working on improving how lottery equipment is deployed to retailers to avoid another one of these situations happening again.
“There was a situation where it looked like a large number of lottery terminals were deployed to a specific retail location in anticipation of these sales. That certainly isn’t something that I was comfortable with, and that’s one of the processes that we’re changing.”
TLC can’t monitor youth gambling issues with couriers
The Sunset Advisory Commission had multiple members express to the TLC their concern about youth gambling through couriers.
The TLC said it had no evidence of youth gambling through these platforms, but also mentioned it wouldn’t be able to track that.
That response wasn’t good enough for Sunset, including Shaheen:
“I’m getting the impression there’s a bunch of stuff that’s going on underneath yall’s noses, and you’re just not aware. This is a really big problem.”
Could lottery couriers be banned in Texas?
The nearly two-hour discussion brought a lot of light on the courier issue in Texas.
The state has the most open policy when it comes to these services, as customers from other countries are able to play Texas Lottery games through some of the couriers.
Still, the TLC and Mindell held to the message that it doesn’t create the laws, it simply acts based on what the laws allow:
“Our view, and it’s been very consistent from the beginning of the lottery, and it’s that we’re not here to set policy. We’re not here to change policy. We’re here to implement the policy as it’s been set.”
As Mindell expressed his desire for more direction, he indicated that it could come in the form of a legal ban of couriers, or even regulation of the companies:
“We identified in our in our Sunset self-evaluation, the courier issue is our only major issue that we wanted to get policy direction on. We’ve now continued that request and our strategic plan, and we appreciate guidance from the legislature in the upcoming session on whether couriers should be banned, regulated, or the practice should be allowed as it exists today.”
The committee, including Shaheen, felt like Mindell was willingly ignoring the legal direction.
“I don’t think you’re doing your job when you’re looking at state statute, and it tells you you’re not allowed to use credit cards to purchase lottery tickets, and you’re enabling it, and that’s a concern. And, I’m struck that you’re telling us that you need clarification by statute.”
If Wednesday is any indicator, the courier policy in Texas is going to remain a focal point in the near future.
Photo by Talaj via Shutterstock
Graphics from the Texas Lottery and Texas Sunset Advisory Commission
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