Headlines across Texas shouted the news: $95 million lottery ticket sold in Colleyville, Texas.
If you heard the news about last week’s Lotto Texas winner, you probably imagined a Colleyville resident walking into a convenience store and buying one or more Lotto Texas tickets and then getting super lucky.
A Watchdog investigation shows how that’s not exactly how it went down.
First off, there’s no convenience store. But there is a storefront in a strip center on Colleyville Boulevard called Hooked On MT, a Montana-related fishing company. That’s the retail lottery store. Nothing on the front of the building would indicate that lottery tickets are sold inside. No sign, no window stickers. Nothing.
Yet from this location in the three days before the April 22 drawing, the sale of $11 million worth of Lotto Texas tickets were handled. That, by far, led the state as the No. 1 sales outlet.
One of those $1 tickets was the winner. Under Texas law, the winner’s name does not have to be made public. So far, it hasn’t been.
Lottery Now store
When The Watchdog visited the storefront this week, I met the boss, Kevin Kramer, chief executive of Lottery Now, the parent company that operates the lottery website, Mido Lotto. He also owns the Montana fishing company, which shares quarters with the lottery outlet.
Most of the sales, he told me, “came through our store to a customer who found us. …. For anyone looking to purchase large volumes of tickets, we are one of several retailers.”
The Watchdog believes it’s important to know that when you buy lottery tickets, you’re not only competing against every Tom, Dick and Harriet. You also could be competing against large syndicates that order millions of dollars worth of tickets, thus giving them far better odds of winning large jackpots, as was the case here.
In lottery lingo the syndicates are called purchasing groups.
In a statement, Texas Lottery executive director Gary Grief said the extremely high jackpot “generated significant interest and participation by purchasing groups to buy large quantities.” He called this “a new dynamic” in lottery sales.
The groups’ interest in the drawing sent sales “through the roof,” Grief said. “It appears the winning ticket was likely bought by one of the purchasing groups.”
He added, “While there is no prohibition on these types of purchases, it certainly generated unprecedented growth over the last few days of the jackpot run.”
This last sentence about no prohibition startles The Watchdog. State law declares that a person commits a felony “if, for financial gain, the person establishes or promotes a group purchase or pooling arrangement” and the organizer retains a portion of the prize money.
Why wouldn’t this ban apply to Internet lottery companies that levy a service charge on ticket sales? The Watchdog asked Grief about this in an email. For this one question, I did receive an answer. (All my other questions put to the Lottery Commission this week were ignored.)
Lottery spokesperson Lauren Callahan wrote back that state law “does not prohibit group purchases.” She then repeated the law, which I summarized above. What about service charges? I asked. No answer.
$26 million in group sales
I asked the commission about its stunning sales figures. In general, almost all recent sales for each Lotto Texas jackpot came in around $1.5 million per draw. But for the final draw on April 22, that haul jumped to $28 million, of which roughly $26 million came from group sales.
This attention to group sales could not come at a worse time for private companies that operate their own websites and help in the sale of lottery tickets. These companies are called “third-party couriers,” and critics say they help non-Texans order Texas lottery tickets online through phone or computer.
Senate Bill 1820 in the Texas Legislature would put a hurt on these outside companies. The legislation would ban the use of smartphones, apps and internet orders to buy or help buy tickets. The bill passed the state Senate and is now in the House.
Phone sales for lottery
How did these companies spring up? A longtime rule under state law is that ticket buyers must purchase in person and buy their tickets over the counter.
But in 2020, during the pandemic, the lottery changed its rules (without legislative approval). Suddenly you could order tickets, sometimes, even though it’s not allowed, from anywhere in the world by phone and computer.
Some of these sites could operate without regulation, organize group purchases, and tack on a service charge.
They pull this off because they are the middleman who align themselves with a retailer inside the state who registers with the lottery.
Grief, the Texas Lottery director, has said his authority stops at the lottery terminal, and his agency is not required to police out-of-state companies.
Traced to Malta
Rob Kohler, a former Texas lottery executive who is now a lobbyist for the Baptist General Convention of Texas, has researched owners of high-tech lottery companies with Texas ties. He traced one company’s primary ownership through various companies all the way to Malta, considered one of the premiere gambling nations in the world.
Kohler told me the top seven retailers selling the most tickets in the April 22 draw all have highly popular websites.
At the top of that list: Lottery Now, Colleyville, Texas.
From inside that storefront, CEO Kramer says he sells Montana fishing souvenirs and refers people to Montana fishing outfitters. He told me that the more money that comes into the state lottery, the greater the benefit to lottery money recipients — veterans and education.
Lottery gadfly Dawn Nettles, the first to write about the $95 million jackpot on her LottoReport.com news website, says her concern is that “hundreds of millions of dollars of Texas money has been sent out of state to fund Powerball and Mega Millions jackpot winners in other states.”
The question before members of the Legislature in the coming weeks is how far will they go? Will they allow phone, app and computer purchases? Or will they override lottery rules and ban them? Can non-Texans legally buy tickets?
Better decide quick. This week Lottery.com revealed plans to sell Texas lottery tickets in a place that’s 1,900 miles from Dallas.
The Dominican Republic.
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