Texas Lottery Power Play
Texas Lt. Gov. probes lottery couriers in a video, as Winner's Corner, a top retailer, sparks debate over sales and commissions.
The Bulletin Board
THE LEDE: Texas Lt. Gov. Dan Patrick is asking questions about lottery couriers.
ROUNDUPS: TN legislature is not a fan of iLottery; New NCAA investigation; MD OSB repeal bill; Quote of the Week.
NEWS: Missouri sports betting launch pushed back several months.
VIEWS: A bet is a bet, no matter how you package it.
AROUND the WATERCOOLER: More sweepstakes news brewing.
STRAY THOUGHTS: The stoic gambler.
SPONSOR’S MESSAGE - Yes, Sporttrade is indeed a prediction market. Always has been.
The Lede: Texas Lt. Gov. Sets Sights on Lottery Couriers
In an X post I was wholly unprepared for, Texas Lt. Gov. Dan Patrick posted a near-six-minute video of an impromptu investigation into a lottery retailer.
You can watch the video here.
In the video, Patrick notes that the Senate overwhelmingly voted to ban lottery couriers in 2023 (the bill passed 29-to-2) before dying in the House."We're going to pass that same bill again,” Patrick said. He then ominously warned that the Senate may not reauthorize the Texas Lottery if the courier prohibition isn’t passed:
"Every 12 years, agencies are up for sunset. The lottery happens to be up for sunset. If we don't pass the sunset bill before we leave this session, the lottery is out of business."
“At a Senate Finance Committee meeting last week, Texas Lottery Executive Director Ryan Mindell insisted the organization has no regulatory authority to prevent couriers from operating.
On Friday, the Texas Lottery sent a letter asking the Attorney General’s office to confirm whether it has any regulatory power over courier services or if legislation is needed.
While Patrick hints at potential fraud in the video, it’s more of a conspiracy theory, as there’s no evidence whatsoever (or reason for that fraud to occur).
“Do you not see an issue where the public might lose confidence if the courier service somehow happened, at this one location in the entire state of Texas, [sold] an $83 million winning ticket, and they also own the location that printed the ticket?”
Let’s be clear: Jackpocket/DraftKings isn’t purchasing tickets or holding on to winners (how would they know that in advance?) to fleece the lottery. The simple answer is that due to the location's sale volumes, they are more likely than any other retailer to sell the winning ticket — more on the sales numbers in a moment.
The one area where Patrick would likely find support is his claim that "the law says you have to sell multiple items [and] this little place in Austin, they were selling board games like Monopoly or whatever."As Patrick said, it doesn’t look like your typical lottery storefront
Patrick highlighted (perhaps inadvertently) something most people may not understand about the courier service industry: the company owns the lottery retailer.
That means all ticket sales go through this one location — a necessary process to facilitate so many online purchases — which could be argued is taking sales away from other brick-and-mortar retail locations.
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.
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.
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Weekend Roundup: TN Legislature No Fan of iLottery; NCAA Investigation; MD OSB Repeal; Quote of the Week
Tennessee lawmakers have questions about online lottery sales: As previously reported in STTP (h/t Lottery Geeks), the Tennessee Lottery added online sales without legislative approval. Now, lawmakers are asking questions. At a hearing, Tennessee State Rep. William Lamberth expressed his belief that the lottery overstepped its bounds: “With this big a change, even though it was only 300 folks taking advantage of it, I truly wish that this would have come through some sort of legislative process. Because this goes far beyond what I believe [the statute] would have envisioned… ACH transfer is not cash or coin. So, I look forward to seeing that legal opinion. Hopefully, it will enlighten us a bit more, but it’s a big move.”
NCAA investigating Fresno State basketball players: Per ESPN, “The Fresno State men's basketball program has drawn scrutiny for potential ties to sports gambling…The NCAA and university are investigating, sources said, and the school has removed one player from the team and suspended two others for at least Saturday's game against Air Force.”
And an update:
Maryland bill would prohibit mobile sports betting: Maryland State Sen. Joanne Benson has introduced SB 1033, which would repeal online sports betting in the state but leave retail betting unchanged. The effort comes on the heels of a similar bill in Vermont. STTP doesn’t expect either bill to gain much momentum. However, they speak to a change in the zeitgeist that I’ve been mentioning more and more.
Quote of the Week: “If we want to allow this, that’s fine. But I wouldn’t make the CFTC the regulator of it. The CFTC is a small agency. It’s got other things to do that I think are more central to its mission.” Tim Massad, former Commodity Futures Trading Commission chairman on prediction markets (h/t Dustin Gouker)
News: Missouri Sports Betting Launch Delayed Until Fall
A familiar foe has resurfaced in Missouri, and a possible summer launch has been postponed to the fall. This is still well ahead of the December 1, 2025, deadline, but it is several months behind the June launch the Missouri Gaming Commission targeted.
Per iGaming Business, Missouri Secretary of State Denny Hoskins “is rejecting the proposed emergency sports betting rules filed by the Missouri Gaming Commission (MGC).” Hoskins' decision pushes the proposed launch timeline back to the fall.
Hoskins told iGB, “The situation does not warrant an ’emergency’ rulemaking designation… Following a thorough review, it was concluded that the matter does not meet the criteria for emergency rulemaking according to Missouri law.”
Hoskins and several other Missouri lawmakers derailed sports betting legislation for several years by leveraging Missouri’s filibuster rules, necessitating last year’s referendum to bypass the legislature. Hoskins and company were adamant that VLTs should be included in any sports betting legislation.
Views: A Bet Is a Bet… And Needs to Be Regulated
In a recent article in Global Gaming Business, industry veteran Bruce Merati made several good points about the “it’s not [technically] gambling” card so many operators are trying to play. Merati’s points align with my opinions on the topic (which will be the focus of this week’s feature column on Friday).
Merati notes that the issue is bigger than “is it gambling” because no matter how you classify these products, they require consumer protection.
“The crux of the issue lies in the format of these offerings. It is not just a legal gray area; it is a direct challenge to the authority of states to regulate gaming within their borders. Bypassing the regulations that states have created to ensure accountability, transparency, and protection for both operators and consumers is a major issue.”
Whether you call it a bet, a wager, a transaction, an entry, or a contract, “The underlying activity is the same,” Merati writes. And that requires licensing (and the thorough vetting that goes with it), regulation (and the accountability that goes with that), and licensing and tax burdens that offset some of the social harm gambling creates.
As Merati put it, you can’t have one set of rules for some operators while others are playing under a different set of rules:
“These rules are not just bureaucratic hurdles; they are critical safeguards designed to protect the integrity of the industry... If platforms like Kalshi and Crypto.com are allowed to operate outside this framework, it could undermine the integrity of the entire system.”
As I previously wrote, what is to stop current licensees from turning in their sports betting licenses, rebranding their offerings with a euphemism for gambling, and claiming they are also a legal product that exists outside current gambling laws and regulations?
“What should operators who have jumped through every hoop to get a license in New Jersey, Pennsylvania, Michigan, or any state that has legalized and regulated online casinos or sports betting do? Just deal with it?
“If that’s the case, why not just relinquish your licenses? Why burden yourself with the financial and regulatory restraints of legal, regulated gambling licenses if anyone can launch an unregulated site that looks and acts like a gambling site?
“Why waste your time and money trying to legalize mobile sports betting in California, Texas, Florida, and elsewhere?”
I agree with Merati, regardless of the format or the euphemism, “If a platform offers bets on the outcome of sporting events, it should be treated as a sports betting operator.” Full stop. Otherwise, we have opened a can of worms inside Pandora’s Box.
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Around the Watercooler
Social media conversations, rumors, and gossip.
In response to my featured column on Friday on the increasing tensions between licensed gambling operators and the sweepstakes industry, analyst and consultant Gene Johnson hinted at a further escalation on the horizon:
Johnson is likely talking about tribal opposition (California tribes have been among the most prominent critics of sweepstakes). Still, given the efforts by commercial operators, led by FanDuel, to mend fences with tribes, it’s possible that Johnson could be hinting at a unified front against unregulated gambling.
And consider this planned education track:
Following the State of the Tribal Nations address is the WIGC’s general session. This year, it will feature multiple presentations and panels moderated by Victor Rocha, proprietor of Pechanga.net. The session is entitled "Gaming Under Siege, Protecting Tribal Exclusivity in California Unregulated Gambling, Legal Loopholes, and the Fight for Tribal Sovereignty” and will feature examinations into various threats to tribal government gaming in California from commercial operators.
Bottom line: Keep an eye out for news coming out of the Western Indian Gaming Conference next week: Monday — Thursday.
Stray Thoughts
Marcus Aurelius would have been a good problem gambling counselor.
"You have power over your mind—not outside events. Realize this, and you will find strength." ~ Marcus Aurelius, Meditations, Book 6, Section 6.