Texas Lottery commissioners have decided to keep their embattled executive director and move forward with a ban on courier services, only several weeks after telling senators they had no authority to do so.
Ryan Mindell has been the primary target of lawmakers the past month following his testimony before the Texas Senate and House on potential improprieties by the Lottery Commission.
Among the issues highlighted by lawmakers are the Lottery’s ever-changing stance on their authority to ban courier services, their relationship with lottery operator IGT Global Solutions Corporation, and questionable jackpot winnings—including two exposed by Lt. Gov. Dan Patrick and the Houston Chronicle.
State Sen. Paul Bettencourt (R-Houston) called on the commissioners to consider canning Mindell late last month during a Senate State Affairs Committee hearing, citing his lack of clear answers on the issues.
“We gave up probably—on a fraudulent win—$57.7 million,” Bettencourt said regarding one of the questionable winnings. He added, “Quite frankly, if I was on your board, I’d vote to fire you. Because I have no confidence in what you’re telling us.”
Despite those concerns, commissioners decided during a Tuesday hearing not to take any action against Mindell and did not provide a reason during the hearing.
Mindell, in his executive director role, is indirectly part of an investigation ordered by Gov. Greg Abbott into the questionable jackpot winnings brought to light by Patrick and the Chronicle’s recent report of alleged child labor in a prior jackpot win.
On February 26, Attorney General Ken Paxton also announced a separate and broader investigation into the Texas Lottery.
Texas Scorecard asked Mindell about the status of a third internal investigation requested by State Sen. Royce West (D-Dallas) regarding the child labor allegations, which he sought to receive by the end of February.
Mindell said commissioners have already provided West with their findings but did not elaborate further.
Before commissioners deliberated Mindell’s fate, they moved forward on a draft proposal that would amend the Texas Administrative Code to halt the courier process.
While the ban does not outright prohibit the practice, it will revoke the licenses of retailers who are “knowingly selling tickets to, working with, or otherwise assisting couriers” on their first offense.
Courier services allow online customers to purchase lottery tickets from brick-and-mortar stores without being physically present at the store. Instead, a lottery courier can buy the customer their ticket at a premium and send the customer a picture of the purchase.
The practice only started in Texas around a decade ago, well after the Texas Lottery Act was signed into law in 1991 and sold its first ticket a year later.
A section of the Texas Lottery Act explicitly prohibits “a person playing a lottery game by telephone.” However, the Lottery Commission has, up to this point, controversially avoided interpreting that section as applying to modern smartphones and the Internet.
Because the Lottery has not taken action, several courier services have opened in Texas since courier practices were normalized, including Lotto.com, Jackpot.com, DraftKings, and DraftKings subsidiary, Jackpocket.
Those companies, which were permitted to operate by former TLC Executive Director Gary Grief, are now gearing up to be prohibited from offering their service in the state.
Rob Porter, chief legal officer at the courier service Lotto.com, made a significant observation while testifying against the new rule change before commissioners, “Texas Lottery leadership was well aware of courier activities.”
They authorized the issuance of terminals and equipment necessary for responsible couriers to operate. They granted authority for couriers in the summer of 2022 to use official Texas lottery logo and IP on courier websites.
“They directed software changes to terminals to … make courier transactions work better,” explained Porter. “You don’t do this with companies that are operating in a regulatory gap.”
Rob Kohler, a consultant with the Texas Baptists’ Christian Life Commission who supports the proposed rule change, then engaged in a back-and-forth with Porter about the reliability of courier services.
“The public should not be misled. Lottery couriers are not a regulated industry in this state. They are an unregulated industry in this state. We passed no rules that recognize them by name. So just to be clear, the owners of these companies have never had background checks. They’ve never been told how to operate officially,” said Kohler.
Porter quickly took to the stand to reply.
“Our companies, including me and our executives, have all gone through background checks and have gone through the hoops required in every jurisdiction we operate. What we’ve asked for, for years to come, is for regulation and guidance to monitor it. We’ll continue to pursue them from the [Texas] Legislature,” said Porter.
The next step in the rule change process will be for commissioners to hear public comments on April 3.
The commission’s move comes one week after senators approved Senate Bill 28, a measure filed by State Sen. Bob Hall (R-Edgewood) that would explicitly codify a ban on lottery courier services into state law.
During and before a Senate Finance Committee hearing in mid-February, Mindell and the Lottery commissioners held that they lacked the authority to take any action on couriers apart from new actions by lawmakers.
However, Mindell released a policy statement ahead of the State Affairs hearing the following week pledging that commissioners would begin to take steps to ban courier services, with or without Hall’s measure being enacted into law.
“You adamantly denied having the authority to do it [ban courier services]. What happened that, all of a sudden, you decided that you did have the authority?” Hall asked Mindell and the commissioners in the committee hearing.
Robert G. Rivera, chairman of the commission, responded that he received legal advice against taking a stand on courier services up until relatively recently.
While the commissioners finally agreed to move forward, culminating in their actions this week, Rivera said he was still unsure at the time of the hearing if they had the authority to unilaterally ban courier services.
After the hearing, Kohler told Texas Scorecard that the courier ban “has been a long time coming.”
“Texas Lottery Executive Director Ryan Mindell has made the correct decision regarding banning so-called couriers from selling Texas lottery tickets,” said Kohler.
He also said he hopes commissioners will clamp down on electronic gambling options by revising certain language in the Texas Lottery bylaws.
