COMMITTEE INVESTIGATES POTENTIAL LOTTERY FRAUD
(AUSTIN) — The Texas Lottery Commission through negligence or criminal intent permitted the theft of a jackpot worth nearly $100 million following years of disregarding the legislature’s intent beginning in 2015, according to testimony before the Senate State Affairs Committee on Monday. Edgewood Senator Bob Hall said that against lawmakers’ will, the commission allowed the virtual sale of lottery tickets, enabling an outside group to purchase tickets covering every possible number combination for the April 2023 Lotto Texas jackpot, winning the $95 million prize. He said he believes the lottery commission failed to do its job. “At best the lottery commissioners were deliberately indifferent,” Hall said. “At worst, they are co-conspirators in the vastest financial crime since Enron.”
Senator Bob Hall outlined more than a decade of lottery commission decisions that led to the theft of a $95 million Texas Lotto jackpot in 2023.
When the legislature approved the creation of a state lottery in 1992, Hall said that lawmakers meticulously crafted the rules to avoid sales to minors and required that all lotto ticket sales be face-to-face out of brick-and-mortar retailers. Beginning in 2015, Hall said the commission began to make seemingly innocuous changes to play rules over a period of a few years that enabled cheating in the lottery, including the use of mobile phone apps and third-party couriers who could purchase tickets on behalf of others. Another red flag came in 2020, when the commission changed the rules to allow for the 24-hour, 7-days-a-week sale of lotto tickets, even when the vast majority of lottery retailers are closed for business. This wasn’t a case of a gang of clever criminals figuring out how to exploit the system, Hall said. Rather, it was done with the direct cooperation of state officials. “It was the lottery staff and commissioners that provided the couriers with authorizations to operate in this state, and made the rule changes to fit the courier ticket order narrative,” he said.
Hall described a pattern of evidence that he said showed the lottery commission’s direct involvement in the 2023 lottery drawing. A typical lottery vendor has one or possibly two official lotto terminals, Hall said. In 2023, four storefronts across the state were given dozens of terminals. Between the four, 25.8 million tickets were sold, covering every possible number combination and guaranteeing a win. The lottery commission never investigated the source of the funds or the provenance of the purchasers, said Hall. Instead, they offered not only the terminals but also technical assistance to those operating what Hall called “sweatshops” in which the thousands and thousands of transactions were made. “The couriers got all the terminals and technical services they needed and it didn’t raise an eyebrow,” said Hall. “No one at the lottery commission said a word about all the special treatment the four locations received that produced the $95 million fraudulent winner.”
The bill offered by Hall for consideration by the committee on Monday, SB 28, would criminalize the use of third-party purchasers and online sales of lottery tickets. This isn’t Hall’s first attempt at addressing this issue; in 2023 he passed a similar bill through the Senate but couldn’t get the needed support in the House. Instead, he was able to insert a budget rider that emphasized that the intent of the legislature was that phone or internet sales of lottery tickets were prohibited. The commission, said Hall, has routinely ignored the directives of the legislature, a sentiment echoed by other members of the committee. “The problem here is that I’ve got an insubordinate agency that can’t read the law and obey the law and frankly behaves as if it believes that what the legislature does is pass suggestions, and not laws,” said Granbury Senator Brian Birdwell.
Early this afternoon, Governor Greg Abbott released a statement saying he was directing the Texas Rangers to investigate the April 2023 lottery drawing, as well as a recent $83.5 million jackpot won earlier this month. “Texans must be able to trust in our state's lottery system and know that the lottery is conducted with integrity and lawfully,” wrote Abbott. “Texans deserve a lottery that is fair and transparent for everyone.”
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