Tossing a bucket of water onto a raging inferno.
The Texas Lottery Commission on Monday announced that it is banning so-called courier services, companies that skirt the state’s legal prohibition on online ticket sales by taking orders for lottery tickets via a phone app and then purchasing the tickets at state-licensed retailers.
The move comes as lottery officials have come under increasing scrutiny and pressure from lawmakers over the agency’s hands-off treatment of the companies, which in recent years have become bigger and bigger drivers of ticket sales.
The agency’s role in an April 2023 Lotto Texas drawing, in which several courier companies arranged for a single buyer to purchase virtually every one of the 25.8 million possible number combination to assure winning the $95 million jackpot, has been the subject of an ongoing Houston Chronicle investigation.
The Chronicle has reported that the operation, planned by a Malta man and financed by a London betting company, was aided by the lottery commission, which helped four companies acquire dozens of state vending terminals to meet a 72-hour deadline and then looked the other way as several of the outlets appeared to violate its rules.
After months of claiming that the big buy was legal and fair to other lottery players, Executive Director Ryan Mindell conceded two weeks ago that it “definitely hurt the integrity and the perception of the game.” The Lottery Commission also said it had changed its rules to discourage a similar operation.
On Friday, lottery Commissioner Clark Smith, who was appointed by Gov. Greg Abbott in 2023, said he was resigning effective immediately, an agency spokesman confirmed. Smith has not responded to requests for comment.
Today’s announcement was the latest capitulation to the building pressure. The ban on courier sales is “effective immediately and aligns with legislative efforts to address serious concerns raised by players and state leadership regarding the integrity, security, honesty and fairness of lottery operations,” Mindell wrote in a release accompanying the announcement.
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Winners Corner is owned by Jackpocket, which was acquired last year for $750 million by the Massachusetts-based DraftKings. In 2023, the last year for which the Texas Lottery Commission has published figures, the store sold about $350,000-worth of tickets every day of the year. Other leading courier services are owned by large, typically out-of-state corporations.
Most have affiliated state-licensed retail locations whose primary job is processing orders the app companies take over the phone. Texas lottery rules require the retailers to be open to the public and conduct some business other than selling tickets, so the courier-related storefronts must present at least the semblance of other retail activity to comply.
By 2023, the state’s busiest licensed retailers were all affiliated with online courier services. At the same time the Texas Lottery Commission continued insisting that couriers operated outside its authority, and so did nothing to regulate them.
Late last year a critical audit of the agency concluded its leaders had allowed the companies to proliferate in Texas without any meaningful consideration of how they should fit into the state’s $8.4 billion lottery business.
A follow-up examination found that, despite the agency’s claims it had nothing to do with couriers, behind the scenes its director appeared to have actively assisted them. Gary Grief, who retired suddenly early last year, declined to participate in the audit.
Since January, when the Legislature convened for its biennial session, lottery officials have come under withering questioning, with state lawmakers blasting them for allowing the companies to become so integral to the lottery without any oversight.
Sen. Bob Hall, an Edgewood Republican whose 2023 bill prohibiting couriers easily passed the Senate but died in the House, has filed a similar measure this year. Plano Republican Rep. Matt Shaheen has filed a bill that would abolish the state lottery altogether.
In an effort to salvage their business, a coalition of courier companies are backing a bill filed Friday by Rep. John Bucy III, an Austin Democrat, that would regulate their operations.
Lottery commission officials, meanwhile, have scrambled to try to keep pace with lawmakers’ criticisms. After years of not seeking a legal opinion from the attorney general over whether the courier business model is allowed by Texas law, Mindell last week finally submitted a request.
See here, here, here, and here for some background. In recent days there have been numerous embarrassing headlines related to the original story of how online ticket firms helped a shadowy business coalition buy a ticket for literally every possible combination and thus guarantee themselves a $95 million jackpot (and a bunch of smaller jackpots to go with it). The Chron has done some excellent reporting, which has led to increasing political pressure on the TLC, culminating in this remarkable turnaround of policy.
I don’t have anything to add to this, I wasn’t able to keep up with all of the twists and turns but this was an obvious inflection point, so here we are. I got not one but two press releases in my inbox from the Coalition of Texas Lottery Couriers, one that bemoaned the ban and one that touted the Bucy bill to regulate them instead. I was also sent a copy of a document sent to state leaders in January claiming that the Lottery Commission was involved in money laundering – the first two news stories linked after the excerpt from today’s story is about those claims – which you can see here. The Trib has more.
UPDATE: Greg Abbott orders Texas Rangers investigation into controversial Texas Lottery jackpots. Clearly, things are going great.