Longtime lottery watchdog Dawn Nettles has sued the former executive director of the Texas Lottery, the vendor responsible for administering the lottery, and Lottery.com for fraud.
For the past year, controversy has swirled around the Texas Lottery, its leadership, and many companies in the lottery gambling space. Increasingly, but not surprisingly, attention on these players has uncovered corruption.
Gary Grief, the former head of the Texas Lottery, recently came under scrutiny after an investigation revealed that he authorized illicit lottery resellers to operate in Texas, a blessing that wasn’t his to give.
Then, in 2023, Lottery.com and two separate black box resellers were used to bulk buy a $95 million jackpot. During a hearing last week, the activities connected to this win were called a money laundering operation—one that the Texas Lottery Commission and IGT assisted.
For its part, IGT sent machines and pallets of paper for ticket printing to facilitate the bulk buying event. The printing was carried out at multiple locations, including a Lottery.com location in South Austin and a separate, unmarked building in Waco, also linked to the company.
State Sen. Carol Alvarado (D-Houston) questioned why then-Director Grief had not been investigated or charged with a crime for his involvement in the 2023 operation. State Sen. Lois Kolkhorst (R-Brenham) called for the Texas Rangers to investigate immediately.
Making matters worse, according to reporting by Eric Dexheimer, a video of the printing operation has been circulated that shows children were involved. If, as State Sen. Paul Bettencourt (R-Houston) pointed out, the 2023 jackpot event was money laundering, these children were participating in a criminal enterprise.
Manfred Sternberg, the attorney bringing suit on behalf of Nettles and a class of Texas lottery players, has a history of successfully suing IGT. Notably, he took part in the “Fun Five” case, which involved litigation over misleadingly designed scratch lottery tickets. That lawsuit was settled before going to trial for an undisclosed sum, but IGT unsuccessfully tried to claim sovereign immunity.
The latest lawsuit against IGT comes as the fallout from last week’s Senate Finance Committee hearing continues to creep through the Texas government.
As with the January Sunset Commission report outlining Grief’s prior misconduct, the Lottery Commission and Gov. Greg Abbott appear to be working hard to ignore what is, on its face, a massive scandal.
The governor has not been neutral on the issue of illicit ticket resellers. At the end of last session, he protected the illicit sale of lottery tickets by telling the Lottery Commission it could ignore a budget rider instructing the agency to stop resellers from operating.
Now, Abbott’s apparent inaction in the face of the mounting money laundering case, the Lottery Commission’s active part in carrying out the fraud, and efforts to sweep it under the rug risk compounding the political and legal damage the episode poses—not only to Abbott, but also to the state of Texas.
During the Sunset Review process, both Gary Grief and former-Chairman of the Texas Lottery J. Winston Krause refused to answer questions about how the lottery had been run on their watch. It’s unclear if they will be compelled to answer questions.
According to multiple outlets, Lottery.com is trying to distance its current leadership from its involvement in rigging the $95 million jackpot in 2023. However, documents and communications recently sent to Texas lawmakers, including Abbott, contradict these distancing attempts.
Text messages forwarded to lawmakers and law enforcement appear to show Greg Potts, the current COO of Lottery.com, texting with Ronald Farah before, during, and after the printing, linking the men directly to the effort.
In an internal Lottery.com company email, Potts also wrote the following:
It was a crazy 72 hours. Lottery.com went from not selling a ticket for almost nine months to producing more than 6 million in a few days. For reference, the initial scope of the project was 5M tickets. Our team’s ability to quickly react and deploy allowed us to exceed that by 22%. Our customer won the $74M Lotto Texas jackpot but unfortunately the winning ticket did not come from our facilities so we will not receive the retailer bonus.
On Monday, April 24, 2023, Lottery.com CEO Matt McGahan sent an email that the “atmosphere must have been electrifying when the machines were turned on and the tickets started printing.” Tony DiMatteo and Greg Potts were copied on that email, which included an inquiry about Gary Grief supplying a quote for a company press release.
Lottery.com’s former leadership—including DiMatteo, Matt Clemenson, and Ryan Dickinson, who were involved with the printing—was supposed to have been fired for cause or forced to resign in 2022 to show regulators the company was reforming.
As of February 19, 2025, Lottery.com is still void in Delaware.
According to a transcript of a recent hearing in Delaware, the company had two weeks to pay its back taxes to the state. The chancellery overseeing the hearing took an aggressive posture toward Lottery.com, stating that if it didn’t pay its past due taxes, he would give the plaintiff the desired relief.
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