The Sunset Committee’s staff evaluation of the Texas Lottery contains some shocking disclosures and noteworthy omissions.
Overall, it feels like a managerial exercise to cauterize a catastrophic wound.
Released Tuesday, the report, which included a review of Texas Lottery leadership, reveals that management, both by staff and the commissioners who oversee the agency, has been an unmitigated disaster.
The report notes that Gary Grief, the agency’s former executive director, was comfortable operating in ambiguity without formal guidance from the commission. That’s an understatement, specifically regarding online lottery sales on his watch.
From its founding, the Texas Lottery was meant to be played in person with cash. Grief, who headed the lottery without approval from commissioners or the legislature, appears to have systematically upended that precedent.
Grief refused to appear before the Sunset Committee to answer questions and took liberties with his power that were in direct conflict with legislative intent. His actions also contradicted Lottery Commission precedent regarding selling tickets online, with credit, and across state lines.
The report stated, “Grief avoided getting that guidance and allowed an environment where couriers flourished.” Again, this is an understatement. He didn’t merely allow it, he encouraged it by giving couriers the imprimatur of the Texas Lottery Commission.
The report does not address significant red flags suggesting Grief was potentially acting in the best interest of courier companies rather than Texans.
For example, consider Lottery.com.
In 2022, Lottery.com, a courier operating in Texas, was embroiled in controversy over accounting irregularities and leadership changes. These issues were disclosed to the Security and Exchange Commission and to all of the states in which Lottery.com was operating, including Texas.
Less than a year after Lottery.com was noted to have broken state law, its application to reestablish its retail license was approved. In April 2023, Lottery.com and its related retailers, backed by an international syndicate, printed millions of tickets to deprive Texans of a $95 million jackpot.
Grief and the Lottery Commission surged machines to locations so the abnormally large number of tickets could be printed, then gave a “move, there’s nothing to see here” wave after the drawing and quickly paid out the claim.
Less than a year after this unquestioned jackpot was sent overseas, Grief announced his retirement from the Lottery Commission.
The report notes, as if it’s something to be lauded, that Grief achieved record sales in his tenure as executive director—sales that were inflated because he abused his power.
Grief’s time as executive director in this way is comparable to the steroid era in Major League Baseball. The record sales come with an asterisk, one that’s only going to become more loaded in the coming weeks and months.
The commission should not be absolved from its lackadaisical oversight of Grief. Critics of the lottery’s operations testify frequently at its hearings, seemingly to no avail, and certainly not regarding the illegal sale of lottery tickets online.
The commission and Grief ignored legal analyses conducted on the couriers that identified areas where courier services would violate state law. Grief ignored these issues and, in 2016, plowed full steam ahead.
When called to testify before the House Licensing Committee in 2022 about couriers, Grief said that TLC had “no business or licensing relationship with these entities.”
According to letters signed by Grief, that was false testimony.
On at least three separate occasions, Grief told couriers they could conduct credit or debit card transactions “on behalf of the Texas Lottery in Texas.” This information, a bombshell discovered during the investigation, was not proactively disclosed by the Lottery Commission’s current leadership.
For this and other reasons, it’s odd that the report attempts to sanitize current staff at the lottery commission, including Grief’s replacement executive director, Ryan Mindell.
Mindell has been an employee of the lottery for eight years, and while Grief was ultimately the one making decisions, it’s not credible to suggest Mindell was unaware of them.
During hearings last year, Sunset staff noted that the agency’s commission chair and the freshly appointed Mindell struggled to respond to questions posed by lawmakers and that the responses were unsatisfactory.
An observer of the testimony might characterize it as misleading, similar to Grief’s testimony before lawmakers.
Of course, this is compounded by the Lottery Commission ignoring the Texas Legislature’s explicit instructions to stop couriers or risk funding after a rider was attached to the budget during the 2023 legislative session.
The Lottery Commission can monitor sales and determine which plays are organic in person versus online. It also has the power to revoke licenses of retailers associated with couriers.
The culture that Grief instilled in the Lottery Commission is still alive and well today, and there’s reason to question whether the commissioners overseeing its operation are on board.
Current Lottery Commission staff, whom the report notes revere Grief, have tried to position themselves and the commission as bystanders in courier services. This report undoes those efforts.
The second half of the sunset report deals with regulating lottery courier services.
By entertaining regulation of courier companies instead of outlawing them, lawmakers are opening Texas up to full-scale casino gambling.
Another note from the Sunset staff report: they admit that this type of investigation into an agency isn’t in their wheelhouse. It’s time for a full criminal investigation.
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