John C. MoritzAustin American-Statesman
Show Caption
Top officials with the Texas Lottery Commission "actively assisted in the setup and operation" of third-party vendors that facilitated the sale of game tickets via a smartphone app, according to a petition filed Thursday in a Travis County state District Court by a vendor seeking to block the commission from regulating lottery couriers.
The petition, filed on behalf of LTC Texas, which operates New Jersey-based third-party vendor Lotto.com, contradicts sworn testimony to legislative committees by the two most recent former executive directors of the Texas Lottery.
And it comes just days before the state lottery's governing board is scheduled to act on a proposal that was unveiled in February to effectively outlaw so-called lottery courier companies in Texas. The 1991 state law that established the Texas Lottery expressly forbids buying and selling game tickets by phone.
The use of courier companies has come under intense legislative scrutiny since early this year, prompted by the circumstances behind an anonymous player winning a $95 million Lotto Texas jackpot in April 2023.
Although the ticket purchases by the player were made in person and not by phone, a group reportedly organized by a gaming entrepreneur operating out of Malta used lottery couriers to buy up nearly all the 25.8 million Lotto number combinations, virtually ensuring it would win the jackpot.
Lottery Executive Director Ryan Mindell, who resigned from his post Monday without stating a reason, was grilled in three legislative committee hearings early in the 2025 session about why he and other lottery officials didn't suspect the bulk purchase might potentially be carried out by launderers of illicit money.
More: Director of the embattled Texas Lottery Commission resigns as agency's controversy swirls
Mindell struggled to answer lawmakers' queries. And just as then-Lottery Director Gary Grief had done in earlier hearings, Mindell told lawmakers that the agency had no authority to regulate couriers and has no “bias one way or the other whether they exist or not.”
Mindell became the lottery director after Grief unexpectedly resigned last year.
Days after his testimony, Mindell backtracked and proposed a rule stating that the license of any lottery retailer that does business with couriers would be revoked. Meanwhile, state legislation to ban courier companies is awaiting further action in the Legislature.
In its court filing, LTC Texas asserted that Mindell, then in his capacity as director of lottery operations, essentially gave the green light to both Lotto.com and another courier company, Jackpocket Inc., to operate in Texas.
The filing included copies of nearly identical letters Mindell had sent to both companies saying they were not required to obtain a license or other authorization from the commission, because “the form of the described transactions does not appear to involve a regulated sale of lottery tickets under the State Lottery Act.”
In both letters, Mindell said he was acting under Grief's authority. The LTC suit does not name either Grief or Mindell as defendants. It names the Lottery Commission and its acting deputy director, Sergio Rey.
Lottery Commission spokesperson Steve Helm told the American-Statesman the agency does not comment on pending litigation.
In the court document, LTC said it went ahead with its plans to operate in Texas beginning in 2022 based on the Lottery Commission's assurance that its business plan was legal.
More: Texas Lottery fines its top vendor $180K for political donations. How IGT is fighting back
"And LTC went above and beyond to ensure compliance with any applicable state law and the state regulatory scheme, relying on guidance from the Commission’s former and current leadership in the process," the company said in the filing. "In return, the Commission changed rules on the fly and without due process."
After the legislative hearings, Gov. Greg Abbott directed the Texas Rangers to investigate matters surrounding courier companies and the April 2023 jackpot. Texas Attorney General Ken Paxton said his office was also examining the matter.
Meanwhile, the budget for the Texas Lottery Commission, which generates about $2 billion a year in profits for the state, was reduced to zero this month by the Texas House. Unless House-Senate negotiators restore the funding, the agency would face being shuttered after Aug. 31.
