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In a major blow for lottery couriers including DraftKings-owned Jackpocket, the Texas Lottery Commission has issued a new policy statement to ban couriers from operating in the state following intense pressure from lawmakers.
Commission executive director Ryan Mindell said the new policy released on Monday (February 24) will take effect immediately and regulations to solidify the policy will be proposed at a lottery commission meeting on March 4 and adopted as soon as April.
In the policy statement, Mindell cited more than a dozen existing prohibitions that could be circumvented by the continued operation of unregulated lottery couriers.
“In order to more fully promote and ensure integrity, security, honesty and fairness in the operation and administration of the lottery, the [Texas Lottery Commission] believes couriers are not legal under Texas law and the TLC will exercise its discretion under the State Lottery Act to take all appropriate action to stop this activity from occurring, including identifying and investigating any licensed lottery retailer suspected of working in concert with a courier and initiating an enforcement action to revoke the retailer’s sales agent license,” the statement reads.
The continued operation of online lottery courier services has been a source of debate in the state for several years, including a bill passed by the Texas Senate last year to prohibit couriers that ultimately failed to clear the House of Representatives.
In prior legislative testimony, lottery officials had maintained they did not have the regulatory authority to stop the couriers from working with licensed retailers under current law.
However, couriers have recently attracted more attention from Texas policymakers, including Governor Greg Abbott and Lieutenant Governor Dan Patrick, after a Texas resident won an $83.5m lottery prize earlier this month through a ticket purchase on lottery courier Jackpocket’s platform.
Abbott ordered the Texas Rangers on Monday to investigate the jackpot win as well as an earlier, $95m jackpot in April 2023 that was the result of a bulk purchase of tickets.
Patrick released a video on X last week where he visited Winners Corner, the retailer affiliated with the DraftKings-owned Jackpocket, calling for a closer investigation of the couriers.
Monday's policy announcement to prohibit couriers came just hours before lottery officials were set to testify before a Senate committee on newly proposed legislation to specifically prohibit lottery couriers from operating in the state. That legislation, Senate Bill 28, unanimously cleared the Senate State Affairs committee late Monday night.
Mindell said in a statement, and later in testimony before Senate and House committees, that the lottery’s change in position came following input from legislators and a review conducted by the lottery following the $83.5m Jackpocket win.
“Previously, the agency interpreted its authority as not extending to the regulation or prohibition of these services,” he said. “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.
“In recent days, our agency conducted a review of our authority under the State Lottery Act,” Mindell continued.
“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.”
Going forward, Mindell said before a Senate committee Monday, retailers will not be permitted to contain more than five lottery terminals. He added that the lottery would be collecting excess terminals from courier-affiliated locations.
An IGT official later testified that the company had removed 42 terminals from the Winners Corner location at the lottery’s direction on Monday.
In a statement, Pete Sullivan, senior vice president of lottery for DraftKings and the former CEO and founder of Jackpocket, said the company would suspend operations in the state.
“Jackpocket has operated in Texas since 2019 with full transparency and in compliance with guidance from the Texas Lottery Commission,” Sullivan said.
“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."
Sullivan said the company remained dedicated to working with lawmakers to “ensure access to secure lottery options” and working with the lottery commission to craft regulations to keep courier services active.
Jackpocket is also a member of the Coalition of Texas Lottery Couriers alongside Jackpot.com and Lotto.com, which was also critical of the policy statement and called on Texas lawmakers to pass a pending bill to expressly regulate courier businesses.
“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 coalition 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.”
“Today’s decision by the TLC to ban lottery courier services is abrupt, disappointing and unnecessary,” the coalition continued. “We will continue to encourage a regulatory solution, such as the one proposed by [House Bill] 3201, which allows our millions of Texas customers to continue to safely and conveniently order lottery tickets using our services.”
The decision of the Texas Lottery Commission also did not pacify critics of lottery couriers, with Patrick saying Monday that he has “never read so much garbage from a state agency press release in my 18 years in office.”
“After years of claiming they had no authority to regulate lottery couriers, today the Texas Lottery Commission suddenly exercised the ultimate regulatory authority by banning all lottery couriers in Texas,” he said on his X account.
“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.”
He added that he would send a letter to the Texas Rangers to expand Abbott’s requested investigation to include any matters related to the lottery commission’s initial decision to allow couriers to operate in the state.
Before Monday’s action, Texas was the largest U.S. jurisdiction where prominent couriers were operating, with a population of over 31m. New York, which licenses and expressly regulates lottery couriers, would be the next largest jurisdiction where the likes of Jackpocket and Lotto.com do business.
A permanent shutdown would be a major hit to the operations.
Across the 19 jurisdictions where Jackpocket operates, Texas represents about a quarter of the addressable market by population, with that figure increasing to just over 28 percent of the 12 jurisdictions where Lotto.com operates, and almost a third of the population in the eight jurisdictions where Jackpot.com operates.
