Texas Lottery Commission deems lottery courier services as illegal

The Texas Lottery Commission (TLC) has ruled that lottery couriers are no longer legal in Texas in what could be a major blow to the burgeoning sector.

The policy change, which will come into effect immediately, has long been called for by Texas lawmakers amid concerns surrounding the integrity and fairness of lottery operations involving third-party apps.

Lottery couriers act as conduits for customers, allowing users to purchase lottery tickets on an app, before a lottery courier buys and stores the physical tickets.  

Leading operators in the space include DraftKings-owned Jackpocket, Lotto.com, and Jackpot.com. Jackpocket, for instance, makes money by charging a 10% fee on deposits.

During the most recent Texas legislative session, three separate bills in the form of HB 389, SB 28 and SB 79 have all been filed with the aim of prohibiting lottery couriers.

Concerns were then ramped up after the TLC submitted a request for opinion to the Texas Attorney General’s office regarding its authority of lottery couriers.

Additionally, the TLC has proposed a policy amendment that would see the Commission able to revoke the license of any retailer found to be working with courier services. 

In light of the scrutiny surrounding lottery couriers, TLC commissioner Clark Smith resigned on 21 February.

TLC executive director Ryan Mindell stated: “Lottery courier services operating in Texas have been a significant concern for many of our stakeholders.  

“Previously, the agency interpreted its authority as not extending to the regulation or prohibition of these services.  

“Since I became executive director less than a year ago, I have been keenly focused on making changes to improve the public’s perception of Texas Lottery games and how they are played and operated.” 

State lottery couriers generate over $173m in annual sales, according to data from the Texas Legislative Budget Board. 

The policy change comes soon after an $83.5m winning ticket was purchased via Jackpocket and sold by retailer Winners Corner, based in Austin.

It was reported by local media that Jackpocket also owned the retail unit, raising concerns over transparency and integrity in the Texas Lottery.

Lieutenant Governor Dan Patrick took to X to highlight the Winners Corner case, reporting that he saw lottery ticket terminals in the back of the store.

The politician called for an investigation into the TLC, as well as couriers and retailers, to ensure that no participants have an “unfair advantage”, alongside efforts to guarantee the sale of lottery tickets is fair. 

Reacting to the TLC’s decision to outlaw the practice, the staunch anti-gambler was damning of the Commission in his comments.

“Today’s action is an obvious admission that the Texas Lottery Commission had the oversight authority all along and allowed these businesses to creep into Texas and undermine the integrity of the Texas Lottery,” Patrick wrote. 

“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.” 

Peter Sullivan, founder of Jackpocket and now senior vice-president of lottery at DraftKings, said there had been a “misconception” over the role lottery couriers play in the ecosystem.

“What we do is allowed,” he explained. “People within the state, which have been verified within the state of Texas order official state lottery tickets.  

“I think there is a misconception that Jackpocket as a courier is buying all these tickets to try to win itself.

“No, we are buying them on behalf of customers that have been age and geo-verified and are playing the games on an individual basis, not a bulk purchase basis.” 

Sullivan has told local media outlet NBC 5 that Jackpocket is suspending its services in Texas. 

Texas Governor Greg Abbott has also called on the Texas Rangers for further investigation into the sector.

“Texans must be able to trust in our state’s lottery system and know that the lottery is conducted with integrity and lawfully,” said Governor Abbott.  

“Today, I directed the Texas Rangers to fully investigate these incidents and identify any potential wrongdoing. Texans deserve a lottery that is fair and transparent for everyone.” 

Representatives of Jackpocket, Jackpot.com, and Lotto.com have all been approached for comment. 

DraftKings shelled out $750m to branch out beyond sports betting, casino and DFS to acquire Jackpocket, with the deal completing last May.

When the acquisition was first announced in February 2024, DraftKings said the transaction would drive $260m to $340 of incremental revenue and $60m to $100m in adjusted EBITDA in fiscal year 2026, assuming there was no additional online sports betting and igaming legislation.