Smaller lottery unexpectedly targeted by purchasing group prompts security discussions

Plans partially foiled by another winner

By Kate Northrop

The Montana Lottery is the latest state to propose rules that would prohibit bulk ticket purchases after an unknown entity bought hundreds of thousands of tickets to scoop a $1.6 million Montana Cash jackpot in May.

One by one, state lotteries across the nation have been taking proactive steps to curb the possibility of organized groups attempting jackpot buyouts after a $95 million Lotto Texas bulk purchasing event rocked the gaming industry in 2023. Now that Montana Lottery officials witnessed an attempt worth $1.6 million take place in their own state, they're proposing rule changes that would limit the number of tickets a player is allowed to buy.

On Aug. 21, the Montana Lottery Commission meeting opened up with a security report from Security Deputy Director Bryan Costigan, whose role involves monitoring for any suspicious activity stemming from the Lottery's sales agents.

One day before the May 24, 2025 Montana Cash drawing, ticket sales spiked almost 1,300% across multiple retailers. Costigan knew there was a purchasing group at work. He described the likely culprit as an out-of-state entity that travels from state to state to take advantage of large jackpots that reach a level high enough to purchase every single number combination and still return a profit.

In this scenario, the buyer typically will team up with a retailer or several retailers to purchase the tickets over the span of two to three days, the amount of time between drawings. It grants the group or individual a "perceived advantage," the security director said in a presentation to the commission.

"It gives an unfair advantage to someone that comes in and buys them after Montanans have spent all this time building a jackpot in this state," Costigan explained. "Montanans contribute to it, they pay to play the games faithfully, and then to have somebody else come swoop in, buy every available ticket combination, and take away the jackpot — it's unfair to our players. It impacts the legitimacy of our games."

There's an emphasis on "perceived advantage" since any other ticket in a drawing still has its own shot at winning the big prize. It's a risk that purchasing groups run when they invest their time and money into the feat, since any other player has a shot at winning to split the jackpot and throw off their plan to profit from the money grab.

That's sort of what happened in May when the $1.6 million Montana Cash Max Cash jackpot was won.

The buyout attempt... or a huge gamble

On May 24, after the Lottery had witnessed a sudden $378,000 jackpot increase, the Montana Cash drawing resulted in two winning tickets that matched all five numbers in the drawing. However, only one of those winning tickets purchased the option for an extra $1 per play to win the bigger "Max Cash" jackpot.

The Montana Cash game has two separate rolling jackpots. All tickets purchased for the game can win the Montana Cash jackpot (the "base" jackpot for the game) by matching all five numbers drawn, but only tickets that are purchased with the Max Cash option are eligible to win the Max Cash jackpot.

The Montana Cash base jackpot was worth $550,000 that drawing, which was then split between the two winning tickets. But the Max Cash jackpot worth $1,116,424 was awarded completely to the winning ticket purchased by the buying group, since their tickets were all purchased with the Max Cash option.

Although the Montana Lottery cannot reveal any identifying information about winners by law, they knew that a purchasing group was indeed at work trying to win a jackpot.

However, it was not a guaranteed win by any means because the buying group did not ultimately purchase all the possible number combinations. If someone wanted to buy all 1,221,759 possible number combinations to hit the Montana Cash jackpot without fail, they would need to purchase 610,880 tickets since each play includes two number combinations. There were only 354,353 tickets (covering 708,706 combinations) sold in the May 24 draw, the Montana Lottery informed Lottery Post, meaning it was not a total buyout.

Because the buying group likely purchased from multiple retailers co-mingled with other player purchases, the lottery doesn't know for sure how many tickets the buying group actually bought.  But we can look at the number of tickets sold for a Montana Cash drawing that offered a similar jackpot level to understand normal ticket sales volume without a buyout attempt involved. The Sept. 2, 2023 drawing was the last one to offer a comparable base jackpot at $500,000. In that drawing, there were 53,628 tickets sold.

With about 300,000 more tickets sold in the May 24 drawing, we can make a reasonable, educated guess that the purchasing entity therefore bought about 300,000 tickets, or 600,000 combinations. That's only around half the total possible number of combinations in Montana Cash, meaning that purchasing group took an approximate 50/50 gamble on hitting the jackpot.

Since they would have had to spend an extra dollar per ticket to add the Max Cash feature and play for the two jackpots totaling $1.6 million, that also means they likely spent around $600,000 on tickets.

We can assume this because the Max Cash jackpot-winning ticket was sold at Hooked on MT on Hot Springs Loop Road in Madison, the top selling retailer in the May 24 drawing, which sold $500,570 in Montana Cash tickets leading up to the draw. If the name sounds familiar, that's because it's a retailer with the same name as the one that sold the $95 million Lotto  Texas jackpot-winning ticket in 2023. The store is owned by a courier service that has a unique ability to facilitate a high volume of ticket sales due the numerous lottery terminals installed in their store needed to support online sales.

Hooked on MT did not return Lottery Post's request for comment.

We know for certain that it was a purchasing group at work because the Montana Lottery had received calls from multiple retailers to inform officials that they agreed to work with an entity and participate in a bulk purchase event, Montana Lottery Content Manager Celina Clift told Lottery Post.

But with any gamble, there's risk involved. Since another Montana lottery player won the Montana Cash jackpot with a $1 ticket in the May 24 draw, that meant that player was entitled to share the $550,000 base jackpot.

However, the purchasing group won with a $2 ticket, meaning they were also entitled to the base Montana Cash jackpot of $550,000. They ended up splitting the $550,000 prize with the other player, each winner receiving $275,000.

Because the entity won the Max Cash jackpot as well, they took home an additional $1,116,424 prize, bringing their total winnings to $1,391,424. In Montana, lottery prizes are subject to a 5.9% state tax plus a 24% initial federal withholding, but the remaining federal rate brings it to 37% owed in federal taxes.

Owing 42.9% in taxes means the purchasing group loses about $596,920.90 from their haul, which brought their prize after tax to $794,503.10. Since we can estimate they spent around $600,000 on tickets, they likely walked away with about $194,503.10 — not a bad take-home after sharing a jackpot, especially considering it was a 50/50 gamble that could have just as easily incurred $600,000 in losses.

Had they not split the base $550,000 jackpot with another player, the entity would have won $1,666,424. Taxes on that prize would have come to about $714,895.90, with their total winnings after tax totaling $951,528.10. The final amount after ticket spend, or their best case scenario without another winner splitting the prize, would have been around $351,528.10. It's a profit that's nearly double what they likely received, but it ended up being a win regardless.

Both jackpot-winning tickets for the May 24 draw have been paid out, the Lottery wrote in an email to Lottery Post.

Putting a stop to bulk purchasing

Following the Lotto Texas buyout in 2023, state legislators wrongfully blamed courier services, and eventually wound up banning courier services in Texas — disenfranchising many players in the state and shockingly leaving loopholes wide open for buying groups to continue exploiting jackpot games.

Lottery Post published an in-depth analysis of the entire event, including a common-sense strategy proposed by Lottery Post Founder Todd Northrop for lotteries to impose a ticket purchase limit that would not impact regular players, but would cut off buying groups at the knees.

The article was later re-published by La Fluer's magazine, a lottery industry magazine widely read by lottery executives throughout the industry.

This year, several state lotteries are indeed implementing Northrop's approach, with the Montana Lottery being the latest to do so.

Within the past five years, the Montana Lottery said they've experienced a bulk purchase event three times, both in scratch-off and draw games. With scratch-off games, the entity will analyze the available prizes and determine if it is mathematically rewarding enough to buy the remaining tickets in a game from multiple retailers. Not only that, but they will work with a retailer to order large amounts of the specific game from the Lottery to acquire more of the tickets.

"These purchases create the appearance of impropriety, mistrust of the lottery, and an uneven playing field for sales agents," Costigan added. "Some [retailers] benefit directly while others are kind of getting screwed."

The Montana Lottery formulated its solution based on other states' handling of the bulk buying practice, particularly Arizona's.

"Arizona had a pretty good solution, and we based a proposed new rule on that," Costigan said.

To disenfranchise bulk ticket buyers and discourage the behavior, the Montana Lottery proposed rules that would punish retailers working in tandem with entities engaging in a bulk purchase attempt. If approved, the rule would allow the Lottery Director to suspend or permanently revoke the license of a retailer who "intentionally facilitated a bulk ticket transaction with a person or persons acting in consent," the administrative rule proposal reads.

It would also grant the Lottery the ability to deny a claim for a winning lottery or sports wager ticket if it was found to have been purchased in relation to a bulk transaction.

The Lottery defined bulk ticket transactions as any person or organization purchases 5% of the total game matrix combinations in aggregate or 5% of the original print run of a scratch-off game within a 24-hour period. The definition applies regardless of whether the purchase occurs in a single transaction or across multiple, or whether it takes place at a single retailer or at several.

In the case of the May 24 Montana Cash jackpot buyout, 5% of the total game matrix combinations equates to 61,088 combinations, or 30,544 tickets.

Multiple individuals "acting in concert shall be deemed a bulk ticket transaction," the proposed rule goes on to say. However, it's intended to target "persons or organizations coordinating their purchases, sharing funds for purchases, or acting on behalf of a common interest or strategy" solely to circumvent and exceed the purchase limit. It would not generally impact everyday players pooling their money to buy tickets as part of a group at work, for example.

Lastly, the rule change would give the Lottery the "right to investigate any purchase patterns it deems suspicious or indicative" of bulk purchases. Lottery officials would be able to access video surveillance footage, purchase records, and take witness statements in investigations.

Costigan said that the Lottery would proactively reach out to retailers to inform them of the likely adoption of these rules, and that they had "special visits" on the docket for retailers they know have been working with entities in the past to facilitate bulk purchases.

The future of lottery couriers in Montana

The $95 million Lotto Texas jackpot buyout that occurred in 2023 prompted a nationwide whiplash reaction from several other state lotteries to reexamine their rules on bulk purchases and courier services, with many conversations about how to regulate couriers still ongoing.

"The Texas Lottery actually catered to them [the bulk purchasers]," Costigan said during the August commission meeting. "They utilized a courier service and gave them additional machines to do all this stuff. We don't do that here. That's not the way we operate. We have two courier services in the state, both courier services are licensed through us, and we treat them like any other retailer."

Unlike the Texas Lottery, the Montana Lottery seems to be focusing on eliminating the act of bulk ticket buying rather than targeting lottery couriers. The Lottery's stance is that it's not necessarily going to prohibit courier services' activity, commissioners said during a Sept. 11 commission meeting.

"They're licensed just like any sales agent," Lottery Sales and Marketing Director Anne Charpentier said. "They can sell all products that they wish to sell as long as they are meeting all of the conditions of licensing and the rules by which all sales agents abide by."