Lottery Commission formally bans third-party courier companies from selling tickets online

Story by John C. Moritz, Austin American-Statesman

The Texas Lottery Commission voted unanimously Tuesday to ban third-party "courier companies" that broker game ticket sales through smartphone apps, a practice that has been in place for years but only recently gained political attention.

Tuesday's action came with little discussion, a far cry from the stinging criticism lawmakers heaped on the recently resigned former executive director of the state-run gaming operation during a series of legislative hearings.

Several lawmakers expressed concern that the couriers are effectively a work-around to the 1991 state law that established the Texas Lottery, which expressly forbids using a telephone to buy and sell tickets. Others warned that faceless transactions can invite money launderers or those underage to illegally play the lottery in Texas.

Ryan Mindell, the director who resigned this month, and his predecessor Gary Grief, who resigned in February 2024, each told legislative committees that they were powerless under state law to regulate couriers.

However, after forceful pushback from lawmakers and Lt. Gov. Dan Patrick earlier this year, Mindell reversed course. He said the law permits him to revoke the licenses of lottery retailers who do business with couriers, which the commission affirmed with its vote Tuesday.

Commissioner Mark Franz said that initially he was skeptical of imposing a ban on courier companies, noting the Legislature is considering action to either regulate the way they operate in Texas or to outlaw them outright. However, he said, his mind changed once he took a closer look over the weeks since Mindell made his recommendation.

Texas Lottery Commission member Mark A. Franz, second from left, said he had initially been skeptical about banning lottery courier companies, but now is "persuaded that this is the right move."

"I have during this 30-day period weighed all evidence, and I am persuaded that this is the right move to go forward, and that we should do the maximum amount allowable under our current statute, which is what this does my in understanding," he said during the meeting.

The measure will promote and ensure integrity, security, honesty and fairness in the operation and administration of the lottery, the rule states.

The Coalition of Texas Lottery Couriers, in an unsigned statement, said the commission's vote "is the most recent in a series of actions that have undermined the accountability and credibility" of the lottery.

"Lottery couriers legally operated for years with the cooperation and assistance of the TLC," the statement said. "Although the agency repeatedly testified that it had no regulatory authority over couriers, in response to political pressure, the TLC chose to abruptly change course and eliminate businesses, jobs, state revenue and a service millions of Texans use to order lottery tickets."

The four sitting commissioners also met behind closed doors for about a half-hour to discuss how to proceed with naming a replacement for Mindell, whose salary was $225,584. They returned to open session but took no action on what they talked about in private. Gov. Greg Abbott has yet to appoint a fifth commissioner to the board.

Meanwhile, one of the lottery courier companies has filed a lawsuit against the commission, asserting that the agency has no legal authority to prohibit them from doing business in Texas. The lawsuit, filed last week in Travis County on behalf of Lotto.com, said Texas Lottery officials had assured the company that it was well within the law when it set up shop in 2022.