Founded in 2000, Lottery Post is a trusted forum and news website for lottery players worldwide. In October, Northrop published a 6,000-word investigative report responding to the Houston Chronicle on Lottery Post. Given the article’s relevance, veracity, and depth, we are pleased to feature an abridged version. You can read the article in its entirety here.
Last year, a New Jersey-based group “bought” a $95 million Lotto Texas jackpot by purchasing all possible number combinations, and it was entirely legal.
The Houston Chronicle alleged the Texas Lottery “helped” the investment group win the jackpot, suggesting the Lottery broke its own rules to aid the winner and certain retailers. There is no evidence suggesting the Texas Lottery collaborated with the winner or deviated from standard procedures. So why has this drawing caused such an uproar? The answer lies in the winning ticket’s seller: a retailer affiliated with a lottery courier. This unusual buyout has led to misguided accusations against couriers and potentially harmful proposals.
The Drawing
After the April 22, 2023 drawing, Texas Lottery Executive Director Gary Grief revealed that coverage was “greater than 99%.” Investment group Rook TX had strategically won the enormous jackpot through entirely legal means.
Lottery Now, a courier service, emerged as the top-selling retailer, cataloging just under 11 million tickets out of 28 million sold statewide. The $95 million winning ticket was sold at their Colleyville storefront, Hooked on MT, which had expanded from one to 13 terminals just before the drawing. By April 19, it had added 12 to its original single terminal, allowing thousands of tickets to be printed daily. From the number of lower-tier prizes won valued at over $599, an educated guess surmises Rook TX bought up nearly every possible combination.
Bulk buying an entire draw isn’t illegal, but the Chronicle alleges that the Texas Lottery Commission (TLC) “helped rich investors win a $95 million jackpot.”
“Behind the scenes, the lottery commission actively helped orchestrate a sure-thing win in a state-sponsored game of chance, seemingly ignoring its own rules in the process,” the Chronicle wrote.
Accusations
The Chronicle’s statement is loaded with several issues. Their phrase “behind the scenes” sensationally implies the Texas Lottery participated in nefarious work. Yet the Lottery was more than happy to discuss its own rules and regulations in conversations with Lottery Post, confirming it followed state-mandated procedures without compromising the game’s fairness.
Second, the “sure-thing win” characterization is oversimplified. While “greater than 99%” coverage of combinations nearly guaranteed a win, Rook TX still faced risks—what if someone else had also won the jackpot that night? The top federal income tax rate of 37% cuts the $57.8 million cash value to around $36.4 million. Subtracting roughly $26 million spent on tickets leaves them with a $10 million profit—not bad. But if another person had split the jackpot with Rook TX, they would have netted a $7.8 million loss. In pointing out that Lotto Texas is a “state-sponsored game of chance,” the Chronicle implied that the Texas Lottery intentionally eliminated the game’s fairness by aiding one of its 21,000 retailers. The newspaper argues that buying a jackpot is unfair to other players since they are “at best competing for half the advertised jackpot.” While true, Rook TX again was not doing anything illegal and, in fact, was taking a multi-million-dollar risk that nobody would split the jackpot with them.
Finally, the Chronicle alleged that the TLC was “seemingly ignoring its own rules.” Lottery Post’s investigation found that the statement is untrue and assumption-based. “Records show the agency first helped the big buyer by jumping to fill several unusual last-minute requests for large orders of extra equipment,” the Chronicle states. While several top-selling retailers for the April 22, 2023 draw made rush orders for additional terminals, a TLC spokesperson told the newspaper that the rapid deployment “followed the agency’s standard process,” which the Chronicle rejected. “In its eagerness to help the retailers with their last-minute equipment requests to handle the big operation, the lottery commission also appears to have ignored its own rules,” the newspaper writes.
Texas Lottery Responds
Texas Lottery Media Relations Division Director Steve Helm labeled the Chronicle’s claims as essentially baseless. “The assertion that retailers did not follow the requirements that a retailer must conduct business other than processing lottery tickets and be open and accessible to the public has not been substantiated,” Helm wrote to the Chronicle.
Though the newspaper said Helm declined to say whether the agency had investigated rules compliance, Texas Lottery Executive Director Ryan Mindell confirmed to Lottery Post that an investigation had determined the rules were followed. To legally sell lottery tickets, retailers must acquire a license from the Lottery, operate a business beyond exclusively selling lottery tickets, and be open and accessible to the public. “It’s an item on the license,” Mindell told Lottery Post over the phone. “You have to certify that you’re going to be selling something other than just lottery tickets.”
Retailers self-reporting their non-lottery business activities might seem problematic, but it’s a limitation of managing a network of 21,000 retailers. Mindell confirmed that Hooked on MT did indeed sell non-lottery products during the sales period for the April 22, 2023 draw.
Mindell also denied that the Lottery was aware of the impending buyout scheme. “We didn’t know this was coming, and we weren’t there,” Mindell explained. “But, we did do an investigation after the fact, and it does appear they had things [non-lottery merchandise] for sale.” Hooked on MT offers fishing supplies, Montana souvenirs, clothing, and Texas Lottery tickets.
The Chronicle also took issue with ALTx Management, another top-selling retailer owned by lottery courier Lottery.com. ALTx and Lottery Now drew suspicion because they operate in nondescript buildings without lottery signage. They’re easy to miss if you’re looking for a place to stop and buy a lottery ticket.
While it may seem odd, Mindell emphasized that businesses do not have to sell physical products to qualify as retailers—they simply can’t exclusively sell lottery tickets. The Chronicle argues that “state regulators appear not to have conducted due diligence,” citing Texas law requiring retailers to remain accessible to the public when processing tickets. The accusation of the Lottery’s retailers not being accessible to the public ignores commonsense exceptions.
Hooked on MT’s posted business hours are 10:00 a.m. to 2:00 p.m. Mindell confirmed that the Lottery does have a record of ticket sales being processed outside these hours, which actually aligns with the Lottery’s rules. “There’s the idea that the retailer gets to set their hours, and the retailer gets to set their business practices,” Mindell explained. “…What we try to do is set up a situation where retailers have flexibility to set their business rules within the high-level constraints.” How retailers manage their business hours, including when they decide to print tickets, is legally up to their discretion.
Financial Arrangements: Different but Legal
Before they are licensed and begin selling, retailers must have a “sweep” bank account on file to allow the state Comptroller’s Office to collect ticket sales revenue minus in-store claim payouts, Mindell explained. Hooked on MT maintained an active account and was swept for the necessary funds. “All licensed retailers, including those that are renewing their licenses, are required to have a bank account on file with the Texas Lottery for the processing of weekly sweeps,” Helm explained to Lottery Post in an email.
The Chronicle alleged that another top seller, Lottery.com, lacked one such account. “Yet in its haste to reactivate Lottery.com’s license, the commission appears not to have noticed the company’s sweep account was closed,” the newspaper writes. “As a result, instead of simply collecting the money owed to it, the lottery commission had to invoice the company to wire it millions of dollars after the draw.”
The Chronicle interprets the maintenance of an active sweep account very literally. The requirement is merely that an account be “on file.” The newspaper also implies that wiring the money was a shady transaction under the table, but it’s totally valid, and there is more than one way to transfer funds if the initial sweep fails—that’s why the concern over whether the sweep account on file was “active” or “closed” is irrelevant.
Helm’s statement confirmed that Lottery.com had an account on file, and that its balance was settled without an issue. “Lottery.com notified the Texas Lottery that its bank account on file was no longer valid and the retailer wired the amount owed for the April 16-22 invoice week to the Texas Lottery on April 25, 2023,” Helm wrote. “After the sweep on April 26, 2023, it was confirmed by the Texas Lottery that Lottery.com’s bank account was closed.”
While sweep accounts are the default transfer method, the Lottery’s primary concern is receiving its funds. The Lottery’s retailer services team works with retailers to solve problems, such as bank sweep errors, to ensure that the state gets its money, and outstanding accounts are reconciled through whatever means necessary. “It’s not ideal, but a retailer could even bring in a suitcase of cash to a claim center if it means squaring away their balance,” Mindell quipped.
“We have retailers of all kinds that are in different situations, and so we’re trying to make sure that we work with them and meet them where they are,” Mindell continued. “…As long as they have the money and they’re going to pay it—that’s all we’re looking for.”
Can Customer Service Be Too Good?
The Chronicle cited an alleged correspondence between a Lottery.com representative and a Texas Lottery employee, where a license renewal reportedly took place in just seven minutes.
“We are ready to resume operations,” the Lottery.com representative wrote on April 19, 2023 at 9:42 a.m. “Your status is now active,” a Texas Lottery representative replied seven minutes later.
The Chronicle argued this speed indicated a lack of due diligence in ensuring retailer compliance, particularly regarding a closed bank account. This point has been debunked and proven irrelevant, so really, the Lottery’s worst crime here is providing efficient customer service.
Retailers can apply for a license via physical mail, fax, email, and online. Applying online may take less time than sending an application through snail mail, and previously vetted retailers can also renew an expired license online.
“Once received by the Texas Lottery, the application undergoes a compliance review, which includes verifying the retailer’s information, and assessing the retailer’s compliance with Texas Lottery licensing requirements,” Helm told Lottery Post. Helm advised the general limit for a renewal timeframe is “within five working days,” and Mindell separately noted that renewals are typically “pretty quick,” especially since necessary documents might already be electronically uploaded.
Did the Texas Lottery have incentive to provide such quick assistance to Lottery Now? Absolutely. The first and foremost goal of any state lottery is to produce revenue for the state—it’s not a secret. The turnaround for granting a pre-existing retailer the ability to sell tickets is realistically a simple administrative switch that the Lottery can flip at will.
“It’s important to remember that these processes followed the agency’s previous standard process, which was in place during the time of the April 22, 2023 Lotto Texas drawing,” Helm noted. “Under that process, the lottery operator worked with retailers to determine the appropriate number of terminals for a location to meet the needs of players and sales demand.”
The massive $95 million Lotto Texas drawing garnered huge attention from players. From the Lottery’s perspective, supporting retailers worried about meeting customer demand was simply good business practice. Lottery Post’s investigation found no evidence that the Texas Lottery treated this drawing or any retailers differently than usual, nor that they conspired with the winner to guarantee the win.
Proposed Solutions
While the Lottery followed all its established procedures, there’s growing concern about public perception of fairness if purchasing groups can “buy” jackpots whenever the prize grows large enough to be profitable.
The original regulations were created with traditional retail in mind, and state officials are now discussing revisions to prevent groups using their buying power to their advantage.
“There’s certainly something about the perception of fairness, and if our players don’t believe that the games of Texas are fair, then that’s a problem,” Mindell told Lottery Post. “We’re going to be looking at our processes and say, ‘Hey, could we have done things differently?’”
During a TLC meeting in August, Mindell discussed two key changes: slowing down terminal deployment to retailers without sustained sales history and implementing new software controls for in-state jackpot games. While these changes won’t affect regular customers, Mindell acknowledged they aren’t a complete solution. “My full expectation is that this activity will not stop across the country,” Mindell stated. “The guardrails I put in place are no guarantee it will not happen in Texas in the future.”
Bans Rarely Work
Purchasing groups have historically sought to guarantee jackpot wins when the odds and financial return favor them, long before couriers existed. Legislators are misdirecting their aim at courier services.
An outright ban would eliminate nearly a tenth of ticket sales and hurt Texas residents who rely on these services. Elderly seniors, disabled residents, shift workers, and others who rely on couriers to play the lottery would suddenly be disenfranchised by such a ban. The core issue isn’t lottery couriers—it’s that someone bought (nearly) every combination.
During the commission meeting, Mindell referenced a telling example. In 1992, Stefan Mandel orchestrated a massive Virginia Lotto jackpot buyout from Australia. He coordinated 2,500 people to purchase tickets and won the $28 million jackpot. Courier services did not exist in the state, so a ban of courier services would not have prevented the jackpot from being “purchased.”
“The [Lotto Texas] jackpot winning ticket was purchased at a retailer that sold over $10 million of tickets in that draw,” Mindell said. “That retailer was affiliated with a courier, but that courier did not sell Lotto Texas tickets at that time. Those are the facts.”
Rook TX essentially modernized Mandel’s method by approaching several couriers for their automated ability to buy tickets in large quantities. Banning couriers won’t solve the problem. Determined purchasing groups could still organize buyouts the traditional way.
A Targeted Solution
While legislators consider a courier ban, Lottery Post Founder Todd Northrop offers a more precise solution. “The key to preventing buying groups from purchasing all possible combinations is to upset the risk/reward ratio,” explained Northrop. “Set a high limit on the number of tickets any individual or group can purchase—high enough that it won’t affect normal players or office pools, but low enough to destroy the risk/reward ratio for anyone trying to ‘buy’ the jackpot.”
For example, should the Lottery impose a 500,000-ticket limit, the odds of someone attempting a maximum purchase of Lotto Texas would face poor winning odds of just 1 in 50. They might win, but they’d more likely be funding the next rollover.
Enforcing purchase limits is not as difficult as it might initially seem. A lottery can easily spot unusual buying patterns and certainly knows when most or all combinations are sold out. Since public trust in games of chance is paramount, state lotteries scrutinize big winners intensely. Reviewing surveillance footage and basic investigation techniques would expose any group exceeding the limit.
The combination of terrible odds, potential losses, and the risk of being caught would deter groups from attempting buyouts. Rook TX’s $10 million profit, split among members, hardly justifies such risks.
What Happens Next
Given the national attention the April 2023 Lotto Texas draw received, lawmakers will likely discuss either regulating lottery couriers or banning them outright in the next Texas legislative session in January 2025. The state faces a critical challenge: balancing revenue potential from couriers and keeping games of chance fair for Texans.
“We want to make sure we’re getting it right,” Mindell emphasized. “Maybe there are a lot of things that we didn’t know at the time that we know now. We’re going to try to find any way to get better.”