(The Center Square) – The Texas Senate unanimously passed a bill Thursday to ban lottery couriers from operating in the state after hearings were held addressing major concerns with the state lottery and Texas Lottery Commission.
Several lawmakers have accused the TLC of facilitating money laundering and potentially roughly $200 million worth of theft, prompting multiple investigations by all three branches of state government.
On Thursday, a bill filed by Sen. Bob Hall, R-Edgewood, SB 28, unanimously passed the Texas Senate to ban lottery couriers in Texas, prohibiting the sale or purchase of lottery tickets on the Internet.
“Over the past weeks, scrutiny has correctly increased on the Texas Lottery Commission (TLC) and their inability to restore public confidence in their operations,” Lt. Gov. Dan Patrick said after it passed. “In April of 2023, the biggest theft of citizens’ money happened when a foreign syndicate purchased 26 million $1 tickets in the Lotto Texas game. The winning prize had reached $95 million. Those tickets were all bought within 72 hours of the winning numbers being announced. The Lottery Commission not only inexplicably allowed this to happen but also provided extraordinary assistance in facilitating the printing of these tickets in several courier locations, one of which had little to no experience in printing tickets.”
Both Gov. Greg Abbott and Patrick called on the Texas Rangers to investigate, including the entire TLC dating back to 2016, “when the Commission, through its own rulemaking, changed the way the lottery operated by introducing couriers into the process of buying and printing tickets on behalf of people on a phone app,” Patrick said.
At a Senate Finance Committee hearing, state Sen. Paul Bettencourt, R-Houston, asked Ryan Mindell, the executive director of the Texas Lottery, if what was going on was “99% probability of money laundering.” He replied, smiling, “I couldn’t commit on that.”
“Well, you need to be able to say what are the obvious signs. Because normal consumers don’t go buy $25 million of $1 tickets,” Bettencourt said. He again asked if buying $25 million of $1 tickets “is a sign of money laundering, yes or no.” Mindell replied, “I can’t answer that question.”
Bettencourt then asked three TLC commissioners, who replied, it was “irregular,” “looked like money laundering,” and “seems to be an indication of money laundering.” After the hearing, at least one, Clark Smith, resigned.
Manfred Sternberg, an attorney who filed a class action lawsuit against former TLC commissioner Gary Grief, Lottery.com and others, also testified. Sternberg alleged that Grief had testified before a House Licensing Committee in 2022 claiming that TLC wasn’t licensing the entities in question after he signed a 2020 letter to Lottery.com stating they could conduct sales online and through apps.
The lawsuit alleges that Grief and Lottery.com executives “manipulated the Texas Lottery System to ensure a fraudulent win” in one $57.5 million payout. It also alleges that the defendants “engaged in illegal lottery ticket sales; allowed fraudulent redemptions; manipulated Texas Lottery rules to benefit Lottery.com” and misappropriated funds.
After Hall’s bill was passed, Patrick described more details from his investigation into a suspicious Feb. 17 Texas Lotto winning of $83.5 million. “I visited a lottery courier location and was stunned to see how the operation worked. The location had two lottery terminals in a tiny retail space – not the usual convenience store, and they had 30-40 terminals behind the wall in a backroom that were spitting tickets out by the second,” he said.
He also explained that “the state does not pay the jackpot for winning tickets; it is paid for by the people who bought tickets believing they had a chance to win. The $95 million jackpot that appears to have been stolen came from honest Texans who bought lottery tickets over the time it took to build up that jackpot.”
Multiple investigations are also underway after a Houston Chronicle report uncovered that a foreign syndicate operating out of Malta, London, Austin, Waco and Round Rock won an April 2023 $95 million Lotto Texas jackpot.
A secondary Houston Chronicle investigation released earlier this month includes a video appearing to depict two children working at state-authorized terminals processing lottery tickets. The TLC “not only permitted a single buyer to win a guaranteed $95 million jackpot, but also … aided the operation,” the Chronicle reported.
This is after a Sunset Advisory Commission investigation of the TLC released last month concluded TLC commissioners were “disengaged and playing a passive role in critical oversight functions.” The report cites examples of Grief making “high-risk policy decisions without adequate oversight;” couriers operating since 2015; penal code violations and potential unauthorized sales and group purchases for individual financial gain.
Patrick said the state legislature would determine in the coming weeks whether to end the Texas lottery.
“The Texas Lottery cannot continue unless the people of Texas have faith that the game is not rigged in advance or that it is not being used as a criminal enterprise to launder massive amounts of money,” he said.
