Texas Lottery Commission Executive Director Ryan Mindell once again attempted to avoid questions from lawmakers during a legislative hearing about controversies surrounding his agency.
While less hostile than recent Senate hearings about the Texas Lottery, representatives on the House Licensing and Administrative Procedures Committee resisted several claims Mindell made on Tuesday.
During the hearing, Mindell answered questions about a $95 million jackpot win in April 2023 which involved one buyer spending $25 million to purchase nearly every possible number combination in the draw.
Lottery.com and two separate black box resellers were used to bulk buy the jackpot. The winner, later identified as a New Jersey-based business entity called Rook TX, eventually claimed the payment of $57,804,000 before taxes.
He also answered questions surrounding another $83.5 million jackpot won by an individual through the courier service Jackpocket, a subsidiary of DraftKings.
Jackpocket is affiliated with the retail store Winner’s Corner in Austin, which sold the winning ticket. At the time of the win, Winner’s Corner had over 40 different lottery terminals behind a wall in the back of its store.
“I want you to know that I lost money, because I play the lottery,” said State Rep. Senfronia Thompson (D-Houston).
“You’re taking the public money, and you’re letting a few people come in and scam the public. You know normally … we’d put them in prison. I lost money, and I want my money back,” she later added.
The representative is not alone in those concerns.
Longtime lottery watchdog Dawn Nettles has filed a lawsuit against Lottery.com, Texas Lottery vendor International Game Technology PLC, and former TLC Executive Director Gary Grief for fraud.
Thompson pointed out that Grief had previously testified in 2022 that the commission had no jurisdiction to regulate couriers.
Even with that testimony, Thompson noted that Grief approved merchants of record letters for three couriers addressed to international payment processing companies, approving the couriers to conduct credit or debit card transactions on behalf of the Texas Lottery.
Mindell, who joined the commission as a legal adviser in 2016, claimed he discovered the letters during a state review of the agency and was “very concerned about what they represented.” He subsequently moved to revoke them.
While Mindell was not a signatory to any of the MOR letters, he signed a document from 2018 sent to the courier service Jackpocket which told the company it does not require a license to operate in Texas.
In a separate back-and-forth, State Rep. Stan Gerdes (R-Smithville) asked Mindell for his work history at the commission. Mindell’s testimony did not mention his position as deputy executive director in 2023, which he had held since September 2022.
Thompson further criticized Mindell, questioning the agency’s reaction to several retailers ramping up their purchases and accumulating lottery terminals before the 2023 jackpot win.
“To me, it would seem that it should have been a wake-up call in that—I know that you have the ability to determine what is purchased in a geographic area. … So it seems to me if a person has two terminals or a terminal and all of a sudden they saw them jumping up to 12 … the population at that locale does not support that,” said Thompson.
Mindell said Thompson’s concerns are why he instituted measures to limit the number of lottery terminals per retail location to five. Before the change, a handful of retail locations had as many as 12, with Winner’s Corner having the most.
Beyond the jackpot winnings, Mindell also discussed the commission’s recent effort to implement a proposed rule change that would revoke the licenses of retailers facilitating lottery couriers.
In the meantime, Mindell assured representatives that the commission was targeting retailers who facilitate couriers through less direct means, pursuing them for “violations related to existing rule and statute.”
“But in fairness, this is something you could have done in 2023,” said State Rep. Dade Phelan (R-Beaumont), the committee’s chair. “You had the authority as a board to do exactly what you just said but two years ago, correct?”
“I think absolutely the authority existed there,” admitted Mindell.
However, Mindell said that commissioners waited to act until they had acquired information from investigations into lottery retailers’ compliance with existing rules and statutes and the nature of their relationships with couriers.
Mindell’s comments echo those made at a Senate Committee on State Affairs hearing in late February, where commissioners revealed they actually did, in fact, have the authority to act on illicit courier services.
Before the State Affairs hearing, and as late as a separate Senate Committee on Finance hearing that same month, the commissioners and Mindell had held that they lacked the existing statutory authority to go after couriers.
In addition, State Sen. Mayes Middleton (R-Galveston) accused Mindell and commissioners at the State Affairs hearing of pushing to regulate, rather than ban, couriers during Sunset Advisory Commission hearings last session.
Mindell said on Tuesday that following those hearings, commissioners created two statutory proposals to ban or regulate couriers. After receiving direction from lawmakers, they eventually decided to move forward with the proposal to ban couriers.
Mindell also cited the recent $83.5 million win through the courier service Jackpocket as an impetus for the decision. According to him, TLC’s investigation revealed that Winner’s Corner violated lottery rules leading up to the winning.
Although the process of implementing the courier ban began last week, commissioners must hear public comments on April 3 before finalizing the rule.
