Texas Lottery Drawings Scandal Will Likely Put the Kibosh on Sports Betting Push

A scandal involving the Texas Lottery may cause lawmakers to rethink any type of new gambling laws in the Lone Star State, and it comes as analysts have widely been touting Texas as one of the next big frontiers in sports betting.

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Two major lottery drawings in Texas that put nearly $180 million in the pockets of winning ticket holders have set off widening state investigations over concern that ticket sellers and buyers may have exploited the rules.

The Texas Lottery, one of the largest in the U.S., is facing mounting scrutiny from state leaders over how the winners of an $83 million jackpot this month and a $95 million prize in 2023 purchased their odds-defying tickets. Both are among the largest jackpots in the history of the Texas lottery.

At the heart of the issue, Texas officials say, is whether the games are on a level playing field.  The companies that purchase lottery tickets for customers remotely, also known as couriers, are at the heart of the investigation.

On Wednesday, Texas Attorney General Ken Paxton launched his own probe on top of one announced earlier this week by Republican Gov. Greg Abbott.  Paxton, we should note, has long objected to gambling expansion in Texas and is not on board with any efforts to allow regulated sports betting in Texas.  Scrutiny over the lottery is not likely to help change his mindset.

“Texas citizens deserve far better than bad actors getting rich off of a lottery system that is open to exploitation, and we will hold anyone who engages in illegal activity accountable,” Paxton said in a statement.

Couriers are companies that buy and send lottery tickets on behalf of customers online. The practice bypasses state law that requires tickets to be purchased in person.

The head of the Texas Lottery Commission said this month that the agency will ban couriers, walking back years of resistance to pushing them out of the market.

“Lottery courier services operating in Texas have been a significant concern for many of our stakeholders,” executive director Ryan Mindell said in a statement. “Previously, the agency interpreted its authority as not extending to the regulation or prohibition of these services.” The agency has since reconsidered after reviewing state laws, Mindell said.

Neither winner of the big drawings has come forward publicly and they are under no obligation to do so under Texas law.

The $83 million ticket was purchased by a customer at a courier store called Winners Corner in Austin on Feb 17. The chain has locations in six states.

The $95 million drawing from 2023 was won after the winners purchased nearly every possible number combination, according to Abbott’s office. An investigation by the Houston Chronicle found the ticket was purchased at a retailer that added a dozen lottery terminals to print tickets the day before the drawing.

Experts told the newspaper that QR codes can be read by the machines to process large volumes of tickets in a short time. Normally, the QR images generate directly from the Texas Lottery Commission’s mobile app.

One of the state’s five lottery commissioners has since resigned amid the criticism and the commission said it will no longer allow tickets to be purchased through couriers.

“We do not engage in bulk ticket purchasing, we are not part of some organized crime syndicate,” Paul Prezioso, an executive at courier site Jackpot.com told lawmakers Monday. “We believe that a regulated courier industry is a net positive for the state of Texas.”

The state lottery has brought in more than $40 billion in revenue and awarded more than $90 billion in winnings since its establishment in 1992, according to the commission’s website.

The Associated Press was used for this report.