A popular lottery app shut down in Texas as lawmakers question the integrity of ticket sales and big jackpot wins. NBC 5’s Sophia Beausoleil has the details.
After saying they couldn't do anything to stop courier services from operating in the state, the Texas Lottery now says that online gaming services aren't allowed under state law and will move forward with new rules to prohibit them. Texas Gov. Greg Abbott has also directed the Texas Rangers to open an investigation into two wins.
Texas Lottery Commission Executive Director Ryan Mindell issued a statement Monday saying a new policy prohibiting lottery courier services is effective immediately and that under proposed amendments, any retailer found to be working with a courier service would lose their sales agent license.
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WATCH HEREAfter a high-profile Lotto Texas jackpot win involving a courier service that purchased the winning ticket for a customer earlier this month, the Texas Lottery and state legislators are taking a closer look at how the couriers operate.
A lottery courier is an unregulated company that takes lottery ticket orders from customers online. After the courier is paid, they purchase lottery tickets from a licensed retailer and transmit a scanned image of the ticket to the customer. The courier retains the ticket until it is determined to be a winning or non-winning ticket. The lottery said the courier and the retailer are often in the same location and that couriers charge a fee for their service to purchase and manage their customers’ tickets.
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On Feb. 17, a winning $83.5 million winning lottery ticket was sold by retailer Winners Corner TX LLC in Austin. The ticket was purchased through an online courier service that owns the retail store where the ticket was sold.
This wasn't the first time a courier service purchased a jackpot-winning ticket in the state. In April 2023, with the odds of winning at 1 and 25 million, a purchasing group bought millions of dollars worth of tickets, nearly every possible number combination, through a Colleyville retailer, Lottery Now. One of the tickets sold through Lottery Now won the state's $95 million jackpot.
Kevin Kramer, the operator of Lottery Now and Hooked on MT, the latter a brick-and-mortar business in Colleyville that served both retail customers and helped fulfill orders placed through their courier app Mido Lotto, spoke with NBC 5 that month and said the winning ticket was not purchased through their app but that the company strongly opposed any move to prohibit the courier model.
Gary Grief, the executive director of the Texas Lottery at the time, said in April 2023 that the Texas Lottery did not have a position on courier services.
“We know they exist. We have made it known that they exist,” Grief said in 2023. “In fact, they have been in Texas since about 2016, but just recently, there seems to be a large amount of interest.”
On Monday, the Texas Lottery's new director said he's taking action on courier services "to address serious concerns raised by players and state leadership regarding the integrity, security, honesty and fairness of lottery operations."
"Previously, the agency interpreted its authority as not extending to the regulation or prohibition of these services. 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," Mindell said. "In recent days, our agency conducted a review of our authority under the State Lottery Act. As a result of this review and information from recent retailer investigations, the Commission will revoke the license of a retailer that works with or assists a courier service and we are moving to prohibit courier services in Texas to ensure all ticket sales comply with state law and agency regulation as well as to maintain public trust.”
The Texas Lottery said the rule amendments would be formally proposed to the lottery commission's board during an open meeting on Tuesday, March 4. The amendments could be adopted in April after a 30-day public comment period.
Abbott said Monday he'd asked the Texas Rangers to investigate the jackpots won through the purchasing group in April 2023 and the courier service earlier this month.
“Texans must be able to trust in our state's lottery system and know that the lottery is conducted with integrity and lawfully,” said Abbott. “Today, I directed the Texas Rangers to investigate these incidents and identify any potential wrongdoing fully. Texans deserve a lottery that is fair and transparent for everyone.”
Texas Lt. Gov. Dan Patrick also countered in a statement Monday saying that the only reason the Texas Lottery was taking action now was because he showed up at the courier service's Austin storefront last week, after the Feb. 17 drawing, and has been asking questions about how the couriers operate in Texas.
"The fact that the executive director claims he is keenly focused on cleaning up the 'perception' of the Texas Lottery misses the point. It's more than managing perception; it is about running an honest game that Texans can trust," Patrick said. "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."
The state legislature is also making moves to prohibit courier services, which they said could facilitate money laundering or allow underage players access to the games. The Texas Lottery noted that during this legislative session, at least three bills are being considered (HB 389, SB 28 and SB 79) that would prohibit lottery couriers from operating in the state.
The Coalition of Texas Lottery Couriers said Monday the sudden action by the Texas Lottery is "abrupt, disappointing and unnecessary."
“Lottery couriers have been legally and responsibly operating in Texas since 2019 while always maintaining a transparent and professional relationship with the Texas Lottery Commission. Throughout this process, the TLC has claimed to have no regulatory authority over courier activities, despite couriers’ persistent requests to be regulated, just as we are in other states," the CTLC said. "Today’s decision by the TLC to ban lottery courier services is abrupt, disappointing and unnecessary. We will continue to encourage a regulatory solution, such as the one proposed by HB 3201, which allows our millions of Texas customers to continue to safely and conveniently order lottery tickets using our services.”
Jackpocket told NBC 5 that they have operated in Texas since 2019 with full transparency and compliance with guidance from the Texas Lottery Commission.
“Despite our proven track record of compliance and commitment to responsible gaming, the Texas Lottery Commission has issued a new policy prohibiting our services, effective immediately. As a result, we are suspending lottery courier operations in Texas," said Pete Sullivan, senior vice president of lottery at DraftKings, which owns Jackpocket. "This decision not only limits Texans' access to the lottery but also directly impacts public education funding. Jackpocket has driven over $550 million in lottery ticket sales in Texas, contributing vital revenue to schools across the state. We remain dedicated to working with policymakers to ensure access to secure lottery options and working with the Texas Lottery Commission to craft regulations that would allow lottery courier services to continue in Texas.”
On Tuesday, Jackpocket was alerting customers that due to the Texas Lottery's policy changes, they had suspended operations in Texas effective immediately and that no new lottery orders could be placed. Jackpocket said they intend to work with policymakers to find a way to allow courier services to operate in Texas.
A watchdog of the Texas Lottery said she welcomes the ban and the investigation into the lottery system.
"It's about time, I've been screaming my head off for a long time and now we're finally getting something done," said Dawn Nettles, who operates lottoreport.com.
She's been critical of the Texas Lottery since the 90s and has spent years tracking complaints, payouts, and overall operations.
Nettles is the main plaintiff in a class action lawsuit regarding the $95 million jackpot in 2023.
For years she's wanted Gov. Abbott to investigate the Texas Lottery.
"I'm elated okay, I cannot begin to tell you, it needs to be investigated," said Nettles who has been following the sunset review process closely and testified during hearings.
She believes apps should be banned citing people pay extra fees, believes it hurts retailers, could allow people from other states to participate and possibly minors.
Nettles said while she's in favor of the lottery, if the commission doesn't make changes, she believes it should go away.
During the 88th Legislative session, the Texas Senate passed SB1820, authored by Sen. Bob Hall, which would have banned lottery courier services. The bill died in a House committee.
