Lottery reveals thwarted attempt at another jackpot buyout
By Kate Northrop
The Texas Lottery revealed in a hearing this week that the same New Jersey-based group that had orchestrated the $95 million Lotto Texas jackpot bulk purchase event in 2023 was actively trying to buy another jackpot.
During a Senate Committee on State Affairs meeting on Monday, Texas Lottery leadership disclosed to legislators that in December there was another attempt at buying out all the possible number combinations to guarantee a Lotto Texas jackpot win.
In the hearing, Lottery Executive Director Ryan Mindell answered questions from Senators who were impatient for answers on how the April 2023 bulk purchasing event had taken place, with Senator Bob Hall alleging the "possibility of an organized crime ring being embedded in the Texas government."
The answers given have unearthed new information amid a quickly evolving situation, in which the Lottery had just issued a ban on lottery ticket courier services that same day.
For context, the Lottery had enacted two guardrails in 2024 that aimed to deter buyout attempts in the future: funneling retailer requests for additional terminals to a higher level of authority and then making a software change on how IGT lottery terminals process wagers for in-state draw games.
Hall grilled Mindell on the Lottery's ultimate decision to continue allowing lottery courier companies to operate in the state, and the Executive Director's response was nothing short of a revelation.
"I know for a fact that the bulk purchaser that came in April 2023 was attempting to do that again in December," Mindell said. "The procedures and software changes that we put in place stopped that. I ordered a number of investigations of these retailers affiliated with couriers."
Senator Paul Bettencourt later called this admission a "blockbuster" and expressed frustration that it was not shared with Legislature earlier, arguing that it was relevant to repeated concerns about potential money laundering.
"This is a blockbuster that you did not tell us about at the Finance Committee meeting — that you had other people trying to do bulk purchases."
Bettencourt conveyed his fears that an everyday lottery player spending a dollar on a single ticket would have no shot at "beating the syndicate" of financiers from London or Malta to win a lottery jackpot.
Mindell reemphasized that the second buyout attempt was prevented thanks to additional emergency software measures the Lottery had put in place together with their systems vendor, IGT. The Lottery had done this after they had caught wind of the plan through one of their retailers.
"We had our retailer contacts that said that that same group was talking to them," Mindell testified. "They were going to work with 30 to 40 retailers. As soon as I found out about that, I instructed IGT to initiate an emergency code release, and I also went and briefed many of the members of [the Sunset Advisory Committee] and of State Affairs. I was in the capital for a significant amount of time on that day in December."
The emergency software change essentially limited the amount of tickets that each terminal can print per day, Mindell explained. Since the deployment in December, there has been a certain limit on how many tickets a given terminal can process.
Chairman Bryan Hughes asked for clarification on exactly how many tickets a terminal is limited to printing, which Mindell declined to answer at that moment. Since the hearing was publicly accessible, such knowledge of those restrictions might just mean organized groups will try to circumvent them.
Representatives from lottery courier companies also testified at the hearing about the tenacity of these purchasing groups, including monitoring jackpot sizes and waiting for mathematical situations where purchasing all or most combinations becomes profitable.
"They're really looking for this," SVP of lottery at DraftKings Peter Sullivan said. "It doesn't happen all the time. It's only when the amount of permutations that are available to purchase, the jackpot's higher than that. So they're watching."
A limit on the number of tickets per machine is a reasonable fix to block an all-combo buyout, if the limit is chosen correctly.
Did the same group use their profits from the last all-combo buyout jackpot to max out as many machines possible on this latest courier ticket win after the group had probed and found out the limit per machine in December?
The whole matter sounds like something that only happens in movies.
The fact that Draft Kings, Sullivan, admits that groups watching the lotteries says a lot. Draft Kings bought Jackpocket which alludes to having some insider info.
I'm still not for capping lotteries. That should be a last resort.
I'd start with capping the number of terminals any single retailer can obtain. But as we see in these hearings that doesn't prevent these groups from making deals with multiple retailers to achieve their goal.
Banning third party couriers, as they've done, will make buying a lottery harder. And I still think these apps and online services should track and post the largest ticket sales. If you can't/won't prevent these groups from buying up tickets you can protect the small money player.
And it would be telling to see a law that required these third party couriers to publish quarterly reports of the accounts that made the largest purchases.
Although this is all coming to light in Texas don't think it isn't happening nationwide.
Driving around looking for food (really I went to my favorite Taco El Acapulco) when. The thought occurred rather than cap the lottery maybe it's time we drew multiple winners and split the pot.
Something like once the jackpot reaches 25 million we draw two winning numbers and 50 million we draw 4.
Still have the opportunity to take home the whole pot if you are the only winner, but it would dissuade groups from trying to buy a lottery.
Maybe we need a poll?
I appreciate that you are earnest about this, but it is not correct to say that banning courier services has any impact on buying groups whatsoever. That was made very clear in an earlier story we published, in which we outlined how a buying group "purchased" a Virginia Lottery jackpot without any courier services operating in the state at all.
The worst mistake is to bluntly apply bans and such. This entire thing required an exact scalpel to fix the issue of purchasing groups, not the sledgehammer that was employed. Because you know what the sledgehammer has done? Absolutely NOTHING to fix the problem of buying groups. But it HAS impacted regular people just trying to play the lottery.
The only reason this latest December attempt was caught was not because of the guardrails. It's because, in the words of the lottery director in testimony, that a retailer informed them that it was being attempted again. Only then did they kick these "emergency measures" into action with IGT. Without the tip, the jackpot would likely have been purchased again.
There is absolutely nothing preventing this or another buying group from trying again. Nothing.
If that were not the case, then the Texas Lottery could remove all the so-called guardrails right now — because courier services are now banned in the state. No courier services, then no purchased jackpots, right?
This is frustrating not only in what is being done by the state and by the lottery, but it is also frustrating in how this slow-motion train wreck is doing nothing to solve the actual problem articulated.
I'd be remiss if I didn't admit you are right in saying that banning courier services has no impact on buying groups.
To be more correct I should have said banning courier services will prevent those groups who want to buy a lottery behind the scenes, or as we're hearing money laundering.
It could be argued that if Lottery.com didn't have 30 terminals at Spicewood then Rook TK would have had to shop around for 30 or more retailers who would have had to dedicate workers to run their terminal 24 hours a day, likely ordering more supplies to feed the machine.
Third party courier are a contributing factor to the issue. Their safeguards are easy to bypass. I remember the 70s Virgina didn't have a lottery and we drove to Maryland to play. In the 90s we drove to a retailer to buy tickets.
There was no third party couriers. They may make things simpler for those who want a easy way, but they aren't essential to having a lottery.
And not many retailers with a single terminal have the luxury of running a machine 24/7 and paying employees to be there. And ordering a large amount of supplies would be a tip off that something was happening. Imagine 30 retailers making that request?
The easy way to stop these groups is to cap the lottery below the number of permutations.
These people are looking for a profit and clean money. How many of them will spend $25 million knowing payout cap is $20 million?
I'm not for capping. As someone mentioned in the discussion thread capping the number of tickets a person can buy at any one time is a major step in preventing a complete buy-out.
That's on the table.
Take their profit away, write regulations that any retailer participating with a group buy-out will lose their license and permanently be banned.
If they have no one to sell them tickets they can't scam the system.
No, banning courier services has no impact on money laundering. You're confusing the issues. It is the buying groups that present the money laundering aspect, not courier services. The lottery and the state have done nothing to prevent buying groups, and thus have done nothing to prevent the theoretical money laundering.
I have no idea about the cap on winning or whatever you're referring to there. I'd rather keep focused on this particular topic.
I've said it before, but once again to those who support banning stuff, just know where this will lead eventually. What you personally value will eventually get banned. Then, when it's too late, you'll get angry.
We're publishing a story tomorrow morning that will give you one possible future for all of this, and that future is no lottery at all.
Don't be an advocate of banning stuff. Be an advocate of adjusting and fixing. Nothing is ever perfect. But we can keep adjusting and fixing until it's as close as it can be to perfect.
There's a lot of really terrific people who work for the Texas Lottery, and who are under a lot of pressure right now because of all of this. It could have been avoided.
Capping the payout is what means.
Once a lottery reaches a certain dollar number, that's the limit of the payout. Doesn't matter how many times it goes unclaimed the payout remains limited to that amount.
As the other poster mentioned their lottery is capped at $70 million. Once that number is reached it doesn't continue to accrue. That's maximum payout for a winning ticket.
And I agree with you: Nobody wants to see these lotteries end, I certainly don't.
Where we disagree is on the effects of the courier services.
To me they have proved to be a liability. A d they are a liability since they can be manipulated. They can be used by these groups to hide their money laundering.
One thing that keeps coming back is those 30 terminals and pallets of supplies.
Even in North Dallas I can't recall any business having more than two, maybe three terminals.
One of the smallest/poorest counties in Texas is just south. Population 43000, give or take, one of the most direct routes between Houston and Dallas. There are 20 total terminals in that county.
I look forward to your input and article tomorrow.
With respect,
G
Oh, you mean changing the game to cap the jackpot. You might as well cancel the game at that point, because the newsflash is that lotto-style games make their profits (like in all gambling) during the peak times. If you delete the peaks, you delete the profits.
By peak times, I mean situations that convince non-regulars to buy a ticket. They don't do that unless the jackpot is through the roof.
Lotteries were created as a way to fund state programs. If they fail to do that, they won't exist. As players, we rarely think about that, just focusing on the mechanics of playing the lottery, but the reality is that wouldn't be possible if the lottery was not profitable.
"Lotteries were created as a way to fund state programs. If they fail to do that, they won't exist."
I love that statement, in short lotteries are not for us, they are for the States to raise funds, we, the players, are the bait in it all - a voluntary tax with a carrot 🥕 dangling at the end.
I think of countries like Canada, UK, Australia etc that don't tax the lottery, yet they use it to fund programs.
I wonder why it's hard for us in the USA to have a similar approach.
If the jackpot is 200M it's 200M period. No annuities (that no one ever takes by the way) You win your 200M and walk away tax free.
How awesome that would be.
Nway, let me go buy my one MM and one PB for the weekend.
Good luck to all.
Makes you wonder in turn if we wont be allowed to buy euro lotteries.
Btw what ever happened to USA _ AUS powerball?
I think we would win all the European Lotteries 🤣🤣
I would definitely play the Canadian Lotto if I wouldn't have to pay the taxes in the USA.
Comes to mind a good example is Texas Cash 5.
It's played 6 nights a week and the jackpot is. Ever larger than $25000 whether it's won or not. And the state is liable for up to $75000.
I guess a better term would be a non-rollover game.
And thinking about the term group. I should be more clear using that as well. We're not talking work groups or a small party of friends spending $50 to $500.
By group we're talking a party organized with the intent, or an organization (like the investment group) playing with the intent of buying a lottery by purchasing millions of tickets.
I admit a change that capped Texas lotto at $20 million would cause a lag, a pause in purchasing, then people would adjust and start buying again.
Texans who play Cash 5 know they can't win more than $25000 and they continue to play. It's an accepted drawback.
Remember, Texas has no state tax so the state wouldn't lose a penny of tax money. And if comes to a capped lottery or no lottery I'll take the cap thank you very much.
If the only way we're going to have a lottery is to ban third party couriers then bye third party couriers. And thank you Lt Governor Dan Patrick for that.
Third party couriers do not add anything to any lottery. They are a convenience for those who want it (or choose to pay a premium/subscription). The state gets nothing from that.
There is so many mitigating factors here. The Texas Rangers investigation. The State Attorney General investigation. And the fraud lawsuit against the state, the lottery commission, Gary Grief, and IGT. And the lawyer involved (can't remember his name) has sued IGT prior.
Texas lottery need to start their investigation with, why a business located in a business strip that sell only board games has 12 lottery machines? the foot traffic is slow. No one is going to a business district after 5:00 pm to buy lottery tickets. Who authorized the machines installed.
Since the con Eddie Tipton fixed the lottery machines has anyone really review the software.
Lotto Texas has two or three winners per year, why is that? When the lotto game began years ago there were many winners per year, check the history.