The Texas Sunset Commission (TSC), the regulatory body that performs reviews and makes recommendations for what to do with failing state agencies in the Lone Star State, has conducted a review of the Texas Lottery Commission (TLC).
In the Sunset Commission’s findings, it mentioned the increasing use of lottery courier apps, whereby players can order lottery tickets online to be delivered from a retailer.
Texan authorities currently turn a blind eye to this arguably unregulated method of gambling. However, a recent $95 million jackpot win conducted through the completely legal mass-printing of more than 28 million tickets by one consortium of players brought the issue into the spotlight.
The Sunset Commission said that the Lottery Commission was too focused on bringing in revenues that fund its social projects. That has included $19 billion for school grants and veterans programs over the past decade. The TSC says this led the gambling regulator to ignore potential concerns about lottery courier apps in the state.
Such apps are “an unregulated and controversial business model that now accounts for an estimated 9% of TLC’s draw ticket sale,” according to the review.
“Having found a way to be successful at its most visible function, raising revenue, the agency has been unwilling or unable to adapt to a changing environment or fully embrace some of its regulatory responsibilities,” the report concluded.
The Draw
The increased attention on the TLC comes after a massive $95 million lottery jackpot in the state was won by a New Jersey-based company that gamed the system.
Rook TX won the April 22, 2023 Texas Lottery draw after buying 25.8 million tickets. The method was perfectly legal, despite essentially taking away any chance of hitting the full jackpot from some two million legit lottery players.
Rook TX invested $26 million to purchase the tickets, expecting to bag $37.5 million post taxes on the lump sum jackpot, plus $2.5 million worth of smaller prizes.
The only hole in the plan would be if a random individual ticket holder also hit the jackpot, on which the chances were vanishingly small. The week of the draw was the 93rd week in a row without a jackpot winner, which is why the rollover top prize was so high.
The Texas Lottery is already much less popular per capita than those in other states, which also aided the jackpot winning scheme.
Lottery Couriers
The plan also wouldn’t have succeeded without lottery couriers. Companies like Jackpocket and Jackpot.com have grown quickly in the U.S. lottery space in recent years, allowing lottery players to order their physical tickets online and have them handled and cashed by the app.
They’ve been so successful, DraftKings acquired the New York-based Jackpocket for $750 million earlier in 2024.
As these apps allow digital purchases, a computer script can automate the process of picking all the possible numbers and ordering the tickets. This allowed Rook TX to order 25.8 million $1 tickets via a lottery courier app Lottery.com, covering the entire draw and ensuring the jackpot win.
However, while the customer may not deal with the lottery tickets under the app – someone has to. And most lottery couriers would not be capable of obtaining that many tickets at such short notice.
In this case, Rook TX collaborated with a local business owner. Richard Wheeler had signed his business up as a licensed lottery ticket vendor so he could become a Lottery.com partner, and was occasionally printing tickets for their customers.
His “Hooked on Montana” fishing tour company does not advertise itself as a lottery retailer. Nevertheless, he printed off 11 million tickets for the April 22 draw, all purchased by Rook TX, which were collected by a courier from Lottery.com.
Lottery.com is no longer licensed to operate in Texas. It also has been investigated by the feds over financial irregularities, and (outside of the huge order from Rook TX), 2023 saw it sell just $25 worth of lottery tickets, according to its own records.
Potential Reform
All of this has seen questions raised by the Texas Sunset Commission about how much oversight the TLC really has over lottery couriers. No law has been broken. But the Sunset Commission’s opinion is influential.
“Since 1977, changes enacted through Sunset reviews have abolished 42 agencies, consolidated another 53, and had an estimated positive fiscal impact of $1 billion, returning $16 for every $1 spent,” its website says.
Its latest report is highly critical of the TLC, but falls short of calling for the state’s only gambling regulator to be abolished or consolidated.
But it does say that reform is needed, especially around the area of lottery couriers. Currently, they are fully regulated and legal in only New York and New Jersey. But they operate in a grey area in basically all states that have lotteries.
David is an online casino expert who specializes in online slots and boasts over 10 years experience writing about iGaming. He has written for a wide range of notable publications, including eSports Insider and WordPlay Magazine.
David graduated Derby University with a BA Degree in English Literature and Creative Writing.
