The Lottery Commission’s Misguided Oversight

When the Texas legislature created a state lottery, in 1991, the statute was carefully crafted to require an individual who
wanted to play the lottery to go to a licensed, brick-and-mortar lottery retailer to purchase a ticket with cash or a debit
card. The purchase by telephone was expressly prohibited. These safeguards aimed to prevent addicts from incurring
gambling debts. Since then, the Lottery Commission has, through the rulemaking process, circumvented the intent of the
statute and enabled independent, third-party couriers to enter the state and begin offering novel ways to play the lottery,
such as by facilitating the purchase of games via an application on a mobile phone or an internet-connected device.
These couriers claim that, because they send a person to purchase a lottery ticket, in person, it is not purchased using a
telephone. However, in a 2023 Senate Finance Committee hearing, several legislators questioned this practice and the
Commission’s misguided oversight.

During the 88th Legislature, my office filed Senate Bill 1820 to prohibit the order, purchase, or sale of a lottery game
digitally by mobile device, including the facilitation of a game via a mobile application or website by an independent thirdparty
courier. This bill directed the Lottery Commission to adopt rules to enforce these prohibitions. Unfortunately, the
House killed the bill.

Per the Legislative Budget Board, in the twelve months to September 30, 2023, lottery ticket sales associated with courier
services were expected to account for $173.1 million. Some couriers have relationships with established, licensed brickand-
mortar lottery retailers and have demonstrated an ability to generate significant game sales. (The above figure
represents an estimate, as the Lottery Commission has no way of segregating sales originating from courier transactions
from walk-in purchases.)

Third-party couriers are not comprehended in current law, though the legislature prohibits the play of lottery games by
phone. The emergence of these couriers in the state represents a legal gray area, frustrating efforts to track sales and to
ensure the fair play of the lottery. Incremental rule changes by the Commission have circumvented legislative intent and
enabled independent third- party couriers to enter the state.

The issue is apt to become even more salient. DraftKings, a sports betting platform, recently acquired JackPocket, one
such third-party courier app. JackPocket acquires new customers at a much lower cost than DraftKings’ current method
and operates in states where online sports betting is not legal (including Texas), providing DraftKings a ready customer
base. DraftKings plans to expand JackPocket to even more states and potentially develop new lottery products within the
app, aiming to capture a larger share of the massive lottery market.

Meanwhile, the Texas Lottery Commission remains in a precarious position. It benefits from the increased sales generated
by these services but faces pressure to uphold the law’s intent. The lack of clear regulation creates uncertainty for both
consumers and courier companies. Additionally, the agency’s cavalier attitude toward guardrails strikes many as a
dereliction of duty.

For its part, the Texas legislature is poised to address the existence of courier services and to restore the lottery to its
conception as a game to be played in person and with cash.

The Texas Lottery Commission is currently undergoing review by the Texas Sunset Advisory Commission. This review
entails a deep dive by Sunset staff into the inter-workings of the agency and results in a staff report, followed by public
comments and a public hearing. For more information, please visit