Texas to investigate lottery jackpots as questions swirl about online ticketing firms

(CNN) — Texas’ governor has directed state law enforcement to investigate two controversial lottery jackpots amid growing scrutiny over the role of online ticketing firms in the state.

Republican Gov. Greg Abbott asked the Texas Rangers to investigate two Lotto Texas jackpots involving virtual ticket sales: this month’s $83.5 million prize, and a $95 million jackpot from 2023 won by a group of investors. Both cases, according to government officials, affect the public’s confidence in the lottery.

“Texans must be able to trust in our state’s lottery system and know that the lottery is conducted with integrity and lawfully,” Abbott said Monday in a news release, as lawmakers blasted the Texas Lottery Commission for failing to regulate lottery couriers.

Lottery tickets may be bought virtually in Texas using firms known as lottery courier services. Couriers collect the tickets for customers at physical stores they often own. Critics argue the practice makes it impossible to verify the legality of the buyers and is vulnerable to money laundering.

Lottery couriers, which have been operating in the state since 2019, became a focus in April 2023 after a single entity bought 25 million lottery tickets in less than 72 hours using a courier service, CNN affiliate WFAA reported. The entity purchased “nearly every possible number combination,” the release from the governor’s office said. The investor doubled its money because the jackpot was so high, and the winner took home $57.8 million before taxes, WFAA said.

The president of Lottery Now, the company used to mass-order the tickets in the 2023 win, declined to comment on the successful purchase. He previously said the winning ticket was purchased in person at the company’s retail location in Colleyville, Texas, rather than through its app, Mido Lotto.

The Texas Lottery Commission has launched an investigation into all courier services operating in the state and has limited the number of lottery terminals allowed to five per retailer, it said in a statement. The commission declined to comment on the investigations when reached by CNN.

Courier services used across the country

Courier services are operating in 19 states, according to a 2024 Florida Office of Program Policy Analysis and Government Accountability report.

Only three states – New York, New Jersey and Arkansas – regulate the courier service industry, according to a 2024 Texas House report. Without those regulations in Texas, couriers aren’t required to obtain a license or permission from the Texas Lottery to operate, the report found.

The odds of winning the Lotto Texas game are 1/25,827,165, though those odds can be improved by purchasing multiple tickets, and in theory, there’s no limit on the number of tickets one person can buy, according to WFAA.

Courier services contributed to $101 million in lottery ticket sales over the first seven months of the 2023 financial year in Texas, according to the Texas House report.

The winning ticket for this month’s $83.5 million prize was purchased at an Austin retail store through Jackpocket, one of the largest lottery courier services in the country, according to a news release. A spokesperson for the company, a subsidiary of DraftKings Sportsbook, said its service does not allow for bulk purchasing and places a $600 daily purchase limit for each consumer.

Texas Lottery Commissioner Clark Smith resigned Friday amid the mounting controversy, the commission confirmed to CNN.

And earlier this month, a class action lawsuit was filed against the former director of the Texas Lottery Commission and several others, alleging fraud, misappropriating funds, illegally selling tickets and manipulating the outcome of lottery games. CNN has reached out to the plaintiffs for comment.

Texas Lottery is moving to ban courier services from operating in the state “to ensure all ticket sales comply with state law and agency regulation as well as to maintain public trust,” Texas Lottery Commission Executive Director Ryan Mindell said.

“Lottery courier services operating in Texas have been a significant concern for many of our stakeholders. Previously, the agency interpreted its authority as not extending to the regulation or prohibition of these services,” Mindell said in a news release.

However, after a review of the State Lottery Act and “information from recent retailer investigations,” the commission “will revoke the license of a retailer that works with or assists a courier service,” Mindell said.

The Coalition of Texas Lottery Couriers called the lottery commission’s announcement “abrupt, disappointing and unnecessary” in a statement reported by WFAA.

“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,” the group said.

“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.”

Jackpocket said on Tuesday it would suspend its operations in Texas.

“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, in a statement.

Sullivan said Jackpocket has driven over $550 million in lottery ticket sales in Texas since it began its services in 2019, and he hopes to see more clear-cut regulation in the state so courier services can keep operating. Jackpocket operates in 18 other states.

Another company, Lotto.com, said it has also been operating in the state legally since 2019 and expressed disappointment by the commission’s decision and is “evaluating our options.”

Republican Lt. Gov. Dan Patrick slammed the Texas Lottery’s announcement in a post to social media. “I’ve never read so much garbage from a state agency press release in my 18 years in office,” Patrick wrote. “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.”

In another post, Patrick asked the Texas Rangers to expand its investigation beyond the two specific incidents to “any and all matters related to the Lottery Commission first allowing lottery couriers into Texas and any and all possible crimes internally or externally arising from the Lottery Commission’s actions or failures to act.”

Last week, Patrick visited the courier-owned Austin retail store that sold the $83.5 million winning ticket and questioned one of its workers about how the business operates in a video posted to social media.

This story has been updated with additional information.

CNN’s Taylor Romine contributed to this report

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