Texas Lottery officials elected to take no action on a legislative direction to prohibit lottery couriers that the state’s governor called unconstitutional.
The state’s legislature earlier this year included a rider in a budget bill that effectively directed regulators to prohibit the use of lottery courier operations, referred to in the bill as “lottery sales by phone,” rather than pass legislation prohibiting it outright.
However, Republican Governor Greg Abbott pointed out the rider in his budget veto message, calling it unconstitutional, as it “purports to tell the lottery commission that it must issue a new rule on a particular subject.”
During a meeting Thursday (August 17), the state’s lottery commission instructed executive director Gary Grief to take no action regarding the rider.
“This agency is mindful and respectful of the policy direction that has been provided by the legislature and it is also respectful of the related statements Governor Abbott provided in his proclamation,” said Robert Rivera, chairman of the commission.
“Based on the latest official action taken, the commission directs the executive director to take no action on the rider and to highlight the lottery courier issue during the agency's sunset review process or the sunset commission to consider.”
The sunset review process is typically held every 12 years for state agencies in Texas and includes a review process that leads to reforms within the agency. The Texas Lottery Commission is scheduled for its review as part of the next review cycle to be considered in advance of the 2025 legislative session.
The Sunset Advisory Commission is a joint legislative commission that includes five senators, five members of the state’s House of Representatives, and two members of the general public.
Grief cited two key points from Bob Beer, the lottery’s general counsel, in reaching a decision on how to proceed.
“As the statute is silent regarding third-party lottery courier services, and the activity related to these services is not contemplated in current law, [the lottery commission] has no jurisdiction or licensing authority over the activity,” Grief said. “And two, [the commission] has never proposed or adopted administrative rules condoning or prohibiting this activity.”
Ryan Mindell, deputy executive director of the commission, said that the lottery courier issue was the “sole major issue” in its sunset review self-evaluation report that would be submitted at month’s end.
Republican Senator Bob Hall, who pushed both the rider and a separate bill that would outright prohibit online lottery sales, said that 2020 rule changes made by the Texas Lottery to permit online sales during the coronavirus pandemic opened the door for lottery couriers.
“They arranged for a third-party to insert themselves between the brick-and-mortar facility and the people who are actually playing the lottery, and therefore, we lost any ability to ensure that those people playing the lottery were actually using cash,” Hall said on the Senate floor when the budget rider was adopted.
“And they did it in a clever way by having a courier service actually make the purchase for the person playing the lottery as opposed to the person actually going in, and that is a clear circumvention by a tortuous interpretation to the way we wrote the law to allow folks to play without having to go into a brick-and-mortar facility.”