Texas Bans Lottery Couriers
In a shocking move, the Texas Lottery Commission is banning online courier services and is revoking the licenses of the retailers they worked with.
The Bulletin Board
THE LEDE: Texas Lottery bans online lottery couriers.
BEYOND the HEADLINE: The impact of Texas’s prohibition of lottery couriers.
LEGAL and REGULATORY ROUNDUP: Titus writes CFTC on prediction markets; NC and AL expansions trend negative; MS divided on OSB.
VIEWS: A new sports betting poll offers insights into gambling behaviors.
AROUND the WATERCOOLER: Sweepstakes are under fire.
STRAY THOUGHTS: You can’t do everything.
SPONSOR’S MESSAGE - Yes, Sporttrade is indeed a prediction market. Always has been. Find out more here
The Lede: Texas Lottery Commission Bans Online Couriers
After Lt. Gov. Dan Patrick drew attention to the issue late last week (see yesterday’s newsletter for more on that), the Texas Lottery Commission has pulled the plug on online lottery couriers in the state.
Per The Texas Tribune, Texas Lottery Commission Executive Director Ryan Mindell announced that lottery ticket courier services are not permitted under Texas law and cast doubts on the legitimacy of the Lottery:
"Lottery ticket courier services are not allowed under Texas law and [the Texas Lottery Commission] will move forward with proposed rule amendments prohibiting lottery courier services within the state."
The Commission had previously said it lacked the authority to regulate online couriers and allowed firms like Jackpocket to operate in the state. Mindell has previously pointed to a “bulk purchase event” in 2023 as a trigger for the Lottery Commission’s review of courier services:
"This goes back to that bulk purchase event that happened in April 2023. Bulk purchasing is when a group of buyers or a syndicate get together and attempt to buy all or substantially all of the combinations of a particular lottery game."
Lt. Gov. Patrick wasn’t buying that, and didn’t mince words in a statement on X following the announcement:
“I've 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."
“The fact that the executive director claims he is keenly focused on cleaning up the "perception" of the Texas Lottery misses the point. It's more than managing perception; it is about running an honest game that Texans can trust. The truth is, the only reason the Lottery Commission acted today was clearly because I exposed the courier services and the Commission when I showed up at one of the courier stores last week. Suddenly, they found religion and now want integrity in their game.”
Gov. Greg Abbott also weighed in. “Today, I directed the Texas Rangers to investigate these incidents and identify any potential wrongdoing fully,” Abbott said in a statement. “Texans deserve a lottery that is fair and transparent for everyone.”
The commission plans to propose rule amendments to explicitly prohibit these services, with formal action slated for an open meeting on March 4, 2025. It should be noted that Texas Lottery Commissioner Clark Smith resigned as this was unfolding. The commission also plans on revoking the licenses of retailers working with the couriers.
That last part is extremely important. As I wrote yesterday, Lt. Gov. Patrick raised questions when he visited Winners Corner, a storefront and licensed lottery retailer that handles Jackpocket’s tickets:
“Why does this matter? Because of the way lottery retailers are compensated in Texas and elsewhere. Texas no longer offers retailers a bonus for selling top-prize tickets (that ended in 2018), but retailers are paid a commission of at least 5% of the retail price of the lottery tickets they sell.
“When tickets are purchased at the location, Winners Corner receives a 5% commission on those sales. This dual role raises questions but aligns with Texas Lottery rules since Winners Corner operates as a licensed retailer.”
Beyond the Headline: Consequences and Repurcussions
So, how big of a deal is this? Due to its population, Texas is one of the top markets for couriers — legitimate couriers like Jackpocket don’t operate in California — and represents about 25% of Jackpocket’s market.
Losing Texas is a huge blow and has bigger-picture ramifications given that DraftKings acquired Jackpocket for $750 million last year and that CEO Jason Robins praised Jackpocket during the company’s recent earnings call.
In a statement to The Closing Line, Peter Sullivan, DraftKings senior vice president, lottery and Jackpocket founder noted that “Jackpocket has driven over $550 million in lottery ticket sales in Texas, contributing vital revenue to schools across the state,” since it launched in 2019 “with full transparency and in compliance with guidance from the Texas Lottery Commission.”
As noted in yesterday’s reporting, “A look at the numbers explains why other retailers might cry foul. According to local reports, Winner's Corner is the top lottery retailer in the state by a wide margin, with total sales of more than $127 million in 2023. Luck Zone in Round Rock is a distant second, with about $27 million in sales.”
A bigger concern is Texas’s actions spurring efforts in other states.
In my weekly premium subscription, The Forecast (message me for details), I list two states that have legislation that would prohibit lottery couriers:
South Carolina bill would authorize debit card payments for lottery/ban couriers: SB 169 in SC would allow lottery purchases via debit card and prohibit lottery courier services. Per reporting, the courier component may not be in the final version as the bill’s sponsor, State Sen. Greg Hembree, said: “Quite frankly, we have debated and really vetted the debit card statute previously. The courier service is really a brand-new idea that is going to require more study and more effort to figure out where the right answer is there.”
Connecticut bill would prohibit sweepstakes, lottery couriers, and more: The Connecticut General Law Committee introduced a bill, SB 1235, to ban sweepstakes. The bill also prohibits lottery courier services, wagers on Connecticut intercollegiate teams except tournaments, boxing, and MMA, and restricts certain types of advertising.
Finally, this is also a warning shot across the bow for the industry as it leans on “technically it’s legal” arguments. Things can abruptly change in this sector and you’re not “safe” until you’re expressly legal. Very few saw this coming, and yet here we are — the sky does occasionally fall in the gambling universe.
Jackpocket is the lightest shade of gray possible in Texas (receiving the blessing of regulators before launching), and it was completely upended yesterday. Churchill Downs is in a legal fight with Michigan over its ADW online racing offerings. And of course, there is the still brewing fights over sweepstakes and prediction markets.
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Legal & Regulatory Roundup: Titus on Predictions; NC and AL Expansions Trend Negative; MS Divided on OSB
Rep. Dina Titus pushes back against prediction markets: As the CFTC prepares to discuss where the lines should be drawn around prediciton market offerings, Dina Titus said on X, “I contacted the CFTC with my concerns about legalizing prediction markets on sports-related contracts. It is a backdoor way to allow sports betting in 50 states, ignoring consumer protections, responsible gaming, integrity monitoring, and state tax revenue rules and regulations.”
North Carolina casino expansion unlikely in 2025: North Carolina Senate Leader Phil Berger has basically slammed the door on casino expansion, saying, “I don’t think it’s something that will see the light of day as far as the legislative session we’re in.” Berger is a tepid supporter of commercial casinos but was highly critical of a previous effort that he believes lacked public input. When asked by local press, “Berger said he isn’t working on it, nor is he aware of any other lawmakers planning to introduce legislation on it.”
Dueling visions of online gambling in Mississippi: A mobile sports betting legalization bill, HB 1302, is making progress in the House, while at the same time, a bill passed in the Mississippi Senate, SB 2510, would codify the illegality of online gambling, including sweepstakes. Quite a circle to square.
Iowa bill would prohibit recently approved casino: After a casino moratorium effort failed in the legislature, a new bill in Iowa seeks to prevent a casino project in Cedar Rapids that the Iowa Racing and Gaming Commission authorized earlier this month. Construction has already begun at the site. Companion bills, sponsored by State Rep. Megan Jones and State Sen. Scott Webster, ban urban renewal plan projects from having gaming facilities in “which a license has been issued on or after January 1, 2025.” Why it matters: As previously noted, preventing new casinos is priority #1, and online casinos are off-the-table until the Iowa casino industry can say mission accomplished.
Alabama is a few votes shy of passing a gambling expansion package. Despite heavy lobbying efforts by the Poarch Band of Creek Indians, Alabama State Sen Greg Albritton, whose district includes the reservation, told local press that he can’t find the 2-3 votes needed to pass a gambling expansion bill, which is keeping him from introducing legislation.
Views: Digging Into Siena Sports Betting Poll Numbers
While the industry sees it as a distraction, Straight to the Point has categorized the SAFE Bet Act as a legitimate threat. This is not only because some version of it could pass in the coming years but also because its presence could cause states to try to align their online gambling laws with some of the legislation’s policies.
And if you’re wondering why the federal government might pass the bill or why states might adopt some of its policies, might I suggest going outside and touching the grass? Talk to some regular folks, and you’ll discover that sports betting, while enjoyed by many, is an annoyance (or worse) to far more people.
Consider a recent poll by the Siena College Research Institute, which found that an overwhelming majority of people approve of federal action like the SAFE Bet Act.
58% of respondents agreed, “The federal government should aggressively regulate online sports betting to protect customers from compulsive gambling.” Only 28% disagreed.
When given more specifics on the SAFE Bet Act, support went up to 63%, and opposition dropped to just 16%:
“The SAFE BET Act is a bill recently introduced in Congress to establish federal regulations for online sportsbooks, such as DraftKings, Caesars, FanDuel, BetMGM and so on. If passed, the bill would prohibit ads for sportsbooks during live events, require sportsbooks to place limits on the deposits bettors can make using their services, and ban the usage of AI by sportsbooks to track users' gambling habits and offer promotions, among several other measures. Would you be in favor of or opposed to this bill becoming federal law?”
Another of the SAFE Bet Act’s policies, prohibiting prop bets, also has widespread public support. Sixty percent agreed with the statement, “Online sports betting on college sports, including prop bets, open individual college student-athletes to potentially harmful public pressures.” Just 21 percent disagreed, and a mere 7 percent strongly disagreed.
Some other interesting bits from the poll:
74% of respondents said they signed up for an account to claim bonus dollars or for a promotion.
22% of respondents have an active account, and 40% of that cohort have a single account.
80% of respondents believe/believed they can make money betting sports.
83% of respondents said they like bets like SGPs, where they can bet a small amount to win a lot of money.
53% believe it’s bad for sports when “Sports commentators offer remarks on sports gambling and potential bets during live games.”
46% agree, and 38% disagree with the statement, “I don’t think online sportsbooks should be allowed to advertise during sporting events on TV.”
48% agree, and 35% disagree with the statement, “Online sports betting will corrupt organized sports.”
50% of respondents say they use RG tools; operator data suggests usage is in the low-single digits.
20% of bettors said they had lost an amount of money that put them in a financial pickle. Repeat: One out of five bettors has lost money they could not afford to.
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Around the Watercooler
Social media conversations, rumors, and gossip.
Yesterday, I noted a not-so-subtle bit of foreshadowing that sweepstakes will be discussed at the Western Indian Gaming Conference this week.
Today, I have more ominous warnings that hint at further efforts to crack down on sweepstakes sites:
Stray Thoughts
I’m pretty sure the team at Regulus Partners has been poking around in my brain, as a somewhat recent note perfectly encapsulates one of my biggest critiques of the industry: The belief that the whole is better than the sum of the parts.
In the post, the Regulus team wrote, “If a company is doing what it knows best and what its customers know it for indifferently, it is not usually a good idea to try to do something it knows less well.”
I see this in the martial arts world all the time.
A school starts getting useless and unecessary accreditations to become a this-or-that specialist, AKA a made-up title that doesn’t require certification.
Schools also add something martial arts adjacent, like parkour (and purchase overpriced equipment), thinking they can cross-sell to martial arts.
A school wants to add an adult or preschool program, so it carves out a spot on the schedule and throws together a special offer to get people in the door.
A lifelong karate practitioner does BJJ or Judo for six months and adds these things to their curriculum.
Here’s how these things tend to play out:
They pay through the nose to receive these accreditations (that no one cares about) and fall into the “if I only had this, everything would be fine” trap.
The equipment collects dust because they don’t invest the time/resources needed to compete with standalone parkour/ninja facilities. As an aside, the people who do parkour/ninja are not interested in martial arts.
They have no experience teaching or working with adults or preschoolers and cannot understand why they cannot get the program off the ground.
They overfocus on these new elements at the expense of their core curriculum or, conversely, under-focus on them, turning them into little more than time sinks.
If they focused on their core products, they’d see far more benefits.
However, the problem isn’t adding new things; it’s thinking you can be the one to do it.
Bringing in a specialist to run an after-school program or classes for “executive” citizens is fine. Go ahead and hire a boxing, BJJ, or judo instructor to teach a dedicated class — someone who is going to focus on that class.
I’ve said this on multiple occasions regarding the gambling industry: Be careful when bringing everything in-house. While it may seem like the smart thing to do, it also makes it difficult to devote enough attention to each product (and cut through the bureaucratic red tape) to make it stand out. Further, all those puzzle pieces rarely fit together as neatly as expected.