iGaming Daily

Jessica Welman (00:02.286)
Tell me if you've heard this one before. A lieutenant governor walks into a puzzle store slash lottery retailer. No, this isn't the start to a bad joke. It could be the start to some trouble for lottery courier companies in Texas though. Can I just start over? I'm sorry, I've just flubbed like four words.

Tell me if you've heard this one before. A lieutenant governor walks into a puzzle store slash lottery retailer. No, this isn't the start to a bad joke, but it could be the start of some trouble for lottery courier companies in Texas. They aren't the only lottery related scandal in the Lone Star State either. We've got all the details on today's episode of iGaming Daily. iGaming Daily is brought to you by Optimo, the number one CRM marketing solution for the iGaming market. I am Jessica Wellman.

editor of SBC Americas, and big news, I'm joined by Justin Byers, senior journalist for SBC Americas. Justin, welcome to the pod.

Justin Byers (01:03.124)
It's glad I'm glad to be back. Excited to talk some Texas and some lottery careers.

Jessica Welman (01:07.576)
Yeah, like lottery couriers are the topic du jour these days. So these have been somewhat on my radar since being at SBC because at one point I ran Lottery Daily and we worked a lot with these guys. How familiar are you with lottery couriers as a concept?

Justin Byers (01:25.878)
You know, for me it's fairly new just because of everything that's been going on in the lottery business itself. I'm originally from a state where lot of your couriers aren't active. So my familiarity with them wasn't necessarily hands on, but with all the recent news, you've had to gather things and kind of learn on the fly.

Jessica Welman (01:44.898)
Yeah, so for those who are not familiar, the lottery couriers, the brands you're looking at are Jackpot, not to be confused with Jackpocket, lotto.com, at one point lottery.com, which has had its own share of issues, was in this game as well. It is another one of those unregulated gray market kind of spaces. And what lottery couriers do is it essentially,

is an app on your phone that you can log into the app and say, hey, I want to buy 15 Powerball tickets. And the courier will buy those tickets from a lottery retailer. You never have to pick them up. They load the numbers onto your phone, and you can check your phone whether or not you've won. So in states where online lottery is not a thing, which is most states, this kind of saves people the trouble of having to go wait in line.

or make a trip to the gas station or wherever you go to get your lotto tickets. It is explicitly regulated in New Jersey and New York. Other than that, not regulated, and they're in 16 states-ish. Does that seem about right? Texas is one of them. Lieutenant Governor Dan Patrick, gambling's best friend.

Justin Byers (02:55.036)
I that seems about right.

Jessica Welman (03:07.244)
decided to pay a visit to one of these before we get into the details of this story. I'll leave it to you, Justin. What is Dan Patrick's stance on gambling in general?

Justin Byers (03:17.93)
So Texas is one of those states where there's a lot of hope for gambling, not the future is not very bright just because of all the stipulations and people like, like Patrick, they're not very friendly with the idea of like in their constituents have a hands on tie to something that's something that's seen as like a sin or something that's seen as morally inept. So that's where

they run into problems with Patrick in Texas.

Jessica Welman (03:49.762)
Well, the other thing is a big donor on Patrick's list are some of these Oklahoma tribes who have their mega resorts in Oklahoma that are largely dependent on Texas residents to come and visit. yeah, again, if you're not an American, you probably don't know this. Typically, the lieutenant governor of a state runs the Senate the same way the vice president runs the Senate.

Justin Byers (04:05.568)
Yeah, it's interesting.

Jessica Welman (04:19.522)
Dan Patrick as the man in charge of the Senate will not call any bill up for a vote in which the majority of Republican senators are not willing to vote in favor of it. And even though some of these bills, like a constitutional amendment to vote on sports betting or casinos, have potentially the support to pass the Senate, they're never going to get called. And he's made that point a million times over.

But now he's got a newbie in his bonnet. He put a video up on, was it Twitter? Or X, I'm never calling it that, I'm sorry. I have to type it in stories and every time I'm just like, big sigh, X. Put a video up where he went to a lottery retailer that is also owned by Jack Pocket.

Justin Byers (04:55.618)
Yeah, it was Twitter.

Justin Byers (05:00.214)
Yeah, I'm refusing to fold.

Justin Byers (05:06.498)
You

Jessica Welman (05:18.116)
So they have bought this. I keep calling it a puzzle store based on the video, but it's kind of like a board game shop, basically, which is a little odd, right? I've never seen that kind of lottery retailer before. I haven't spent a lot of time in Texas, though. I'm used to like gas stations and grocery stores, right?

Justin Byers (05:26.528)
That's the vibe I was getting, Old school board game.

Justin Byers (05:40.532)
Right, right, or maybe even a bar. There's a couple. Place. Yeah. Right. Yeah. I know in Illinois even they export that, but right. Something like that. A board game store.

Jessica Welman (05:44.99)
OK. Ohio, when you lived in Ohio, they had some of these. Yeah.

Jessica Welman (05:52.226)
Yeah, it's a little, it is a little strange that this like board game shop is like, you could buy lotto tickets here too. That being said, he was very upset because somebody in Texas won an $83 million jackpot via a ticket purchased at this location. And essentially best we can tell, we didn't really get a look in the back based on the video, but it seems like the front of this building is this puzzle board game shop.

And in the back is where the ticket printing is done for lottery tickets. And so this seems to be where Jack Pocket kind of prints and processes all the tickets that come in on the app. It seemed to me, and correct me if I'm wrong on this one, that he didn't understand that Jack Pocket didn't win $83 million, just someone who bought a ticket via Jack Pocket.

won $83 million and they collected the processing fee on it or whatever. Did it seem like he didn't understand it to you?

Justin Byers (06:54.484)
Yeah, and I think that's why with a lot of the public about lottery couriers and themselves, I don't think he's in himself the only person that kind of thinks that way. But the fact that he's thinking that Jackpocket pocketed that much money, it kind of goes, especially when we're gonna talk about this lawsuit coming up, it's sort of, yeah, it's not lined up right with his thinking.

Jessica Welman (07:15.042)
Yeah.

Jessica Welman (07:19.278)
Jackpocketpocketed. It sounds like a vocal warmup we would do before the podcast. Jackpocketpocketed. A pocketful of pockets. Yeah, he kind of framed it in a way that seemed like this was very deceitful and dishonest. And I was just like, I'm pretty sure they're very transparent that that's how this works. I think what was new and interesting to me is I didn't really know the relationship.

between couriers and the retailer themselves. I didn't know if they partnered with a particular retailer. I guess in some states they might just process. They have a license. It's prominently displayed. It's a little weird that it's a store that you don't normally see lotto tickets in, but like the Texas government signed off on it. And the lottery makes just as much money from this as a gas station lotto store would.

Justin Byers (07:52.844)
Mm-hmm.

Jessica Welman (08:17.336)
I don't really get why he thinks the state should be this worried about it. I buy the argument if you are the president of the corner store association why this is a concern for you because you're potentially taking foot traffic out of your store. He was kind of presenting it like an ethical issue and it seems like he's gonna drop some sort of legislation related to this or somebody is.

Justin Byers (08:27.874)
No.

Justin Byers (08:43.933)
I wouldn't be surprised just the way his the way they've been attacking this issue. I think in Texas one way to attack it is through legislation. And we're already kind of seeing that this week with everything that's been going on and all the operators courier services that are stepping out in support of certain legislation. I think that's going to be an ongoing trend in Texas. We may not get progress this year. We might not get progress next year, but I think with the legislative power.

that they're willing to press, think it's gonna be a long standing issue when it comes to using the courts to get something done.

Jessica Welman (09:17.624)
Yeah. Well, just a reminder, they may not get anything next year either because Texas legislature only meets in odd numbered years for reasons I will never understand. Yeah, it's not like we don't have anything. We're not busy. It's fine. Yeah, I think one last wrinkle worth pointing out given Patrick's anti-sports betting stance. Would you like to remind the audience who owns Jackpocket?

Justin Byers (09:24.576)
Yeah, odd number years. Especially the great state of Texas as they say,

Justin Byers (09:47.523)
Yeah, so last year we got a big, big deal. was it almost close to a billion dollars? Yeah, 750, draft kings ended up buying the entire holdings, the entire stake of Jackpocket. So now that we have one of the largest sports betting companies getting into the lottery business and it's still premature, they're still now just getting this deal kicked off. We're gonna see a lot more.

Jessica Welman (09:54.148)
It's like 750 million, right?

Justin Byers (10:16.412)
stakeholder interests in the lottery career game here soon now that we got Big Dog in the fight.

Jessica Welman (10:18.041)
Yeah.

So yeah, this is shots fired not just at Jackpocket, but at DraftKings. You mentioned there have been some legislative actions on this. I think it's like last note and a little teaser before we take a break. There's a very specific reason why the state legislature and Patrick don't have an enormous amount of faith that the Texas lottery can handle this on their own. And we're going to talk about that after this brief message.

Jessica Welman (10:49.508)
Okay, welcome back to iGaming Daily. We just went Texas Lotto Berserk last week and Justin, you got to take a deep dive on, I love when you get to use the word scandal, fraud. In an industry where we usually have to write things like enlightening new partnership, it's always fun to get a big juicy story. So why don't you tell us about what's going on with this $95 million, is it a lottery?

Justin Byers (11:03.713)
Yeah

Jessica Welman (11:19.306)
Scheme, scandal, fraud. Yeah.

Justin Byers (11:20.608)
Yeah, I'd call this scheme fraud scheme. Right? Yeah, they're they're two and two on this one. It's interesting because this big amount of money when it comes to the lottery, that's what a lot of people are attracted to is big numbers. And this is exactly that. And this is a messy situation that these companies have gotten themselves in. So in Texas, there is a group of investors who came together and collectively spent almost twenty six, twenty seven million dollars.

by lottery tickets in order to win a $95 million jackpot. And so what this class action suit is, is alleging that there's a scheme that this group of investors ran along with another courier service to kind of buy as many tickets as they can to get a chance at that jackpot.

Jessica Welman (12:11.256)
Yeah, you might, those at home might be wondering why would you spend this much money on a losing endeavor like the lottery. There are instances sometimes where jackpots get large enough that it makes sense to buy every mathematically possible combination of numbers. It's like lottery arbitrage, essentially. So that was what was happening in this, right?

Justin Byers (12:39.106)
Correct, yeah, we've got all, it's pretty much like if you have, for example, 50-50 tickets at a baseball game, and you wanna buy, you wanna have the biggest shot at winning the 50-50 raffle as you can, so you buy as many tickets as you can. Hope you're fit to have that winning ticket, and that's the exact situation we've got ourselves in here.

Jessica Welman (12:48.878)
Mm-hmm.

Jessica Welman (13:01.646)
So, I mean, is it against the law to buy a bunch of tickets? Like, where is the potential, like, criminal infraction?

Justin Byers (13:09.376)
Yeah, so it's not against the law to to go about buying a ton of tickets in this manner what the issue is and what they're saying from a class action standpoint is is They've been running a long-running scheme in the scheme is them also teaming up together. There's also another situation where we have one of the executives at one of the lottery couriers manipulating

play to win Powerball tickets. And so that also comes into play into the long running scheme and that's how these two issues have come together.

Jessica Welman (13:47.342)
See now if Dan Patrick had said, a guy who works for this place happens to keep buying winning tickets, I would be like, okay, that is something I am concerned about. So bit of a misfire on that one. Now there is a mem, wasn't it like the head of the lottery was in on all of this? The former head of the lottery, allegedly. This is where I got, legal disclaimer.

Justin Byers (14:09.652)
Yeah, lottery... Right. Allegedly.

Jessica Welman (14:15.008)
giant allegedly over everything that we're saying for the previous four minutes and however long we keep going.

Justin Byers (14:26.498)
No, allegedly lottery.com founder Ryan Dickerson. He's the one who had allegedly manipulated the, the Powerball tickets to win two back to back $50,000 Powerball wins back to back years, which is as yeah, one year 50,000 next year 50,000. if we all know about odds and

Jessica Welman (14:43.638)
I was like back to back days.

Justin Byers (14:52.598)
how slim chance that is. So that's why things have been called into question, particularly from a leadership standpoint.

Jessica Welman (14:59.704)
And what's Gary Grief, the former lottery executive's kind of role in all of this?

Justin Byers (15:04.884)
Yeah, so grief got tied into this this case because he was integral in getting lottery.com to change its headquarters from California to Texas. And so they believe that his efforts to relocate the business was part of the long running scheme to win those tickets in Texas. So that's how Gary got tied into the whole thing. It's and that's why we've got

Jessica Welman (15:16.42)
Justin Byers (15:34.23)
a scheme that's sort of, from a legal perspective, it's pretty comprehensive because you've got a lot of different parties working a lot of different parts for the same goal.

Jessica Welman (15:45.174)
Okay, so to be clear, nobody's been arrested, nobody's been charged with a crime, but there is a lawsuit, correct?

Justin Byers (15:53.484)
Correct, A class action that's been filed by a, what's, by a, I wanna say she's, she's lottery, right, yeah.

Jessica Welman (16:02.048)
LottoReport.com Don Nettles, who is, I guess, like a lottery reporter who has kind of been following this. The Houston Chronicle originally broke this story, and then she filed suit after.

Justin Byers (16:19.714)
Correct, yeah. So she took it on us on herself to recognize what was going on and start the lawsuit and hopefully get some relief for herself and all these people that have been allegedly defrauded.

Jessica Welman (16:34.464)
Interesting. All right. So we've got that going on. And then there was like a Senate hearing about some of this where they were asking some questions. so that kind of explains some of the timing of Dan Patrick's video. It seems like there has been some news that is positive for lottery couriers, though. You got this press release this morning. What's?

Let's add another bill. Why not make it 60 or 70 that we're tracking this year? What's this new bill?

Justin Byers (17:02.826)
Yeah

Justin Byers (17:06.978)
Yeah, so we've got some legislation that's favorable for a of your careers and it's given them some regulatory kind of oversights and framework to work with. It kind of legitimizes the business that's already there.

This is what this measure attempts to do and it's already garnered some support from some of the major couriers of killing jackpocket and lottery So it's going to be interesting to see how this moves forward I know it's going to be something they want to get done just because of this issue right now to kind of clear things up but from legislative

Standpoint is it going to progress and actually get enacted? We were waiting to see but it's looking favorable from a standpoint of it's already garnering support

Jessica Welman (17:51.51)
Is it a House bill or Senate bill?

Justin Byers (17:53.706)
I want to say it is that's a great question. It is.

Jessica Welman (17:58.564)
That's a great question that we don't know the answer to. Let's look. It is... Okay, so this means just again to reiterate, even if it gets through the House, you've got Mr. Patrick over in the Senate who can just not even call it, you know.

Justin Byers (18:03.497)
is a house bill.

Jessica Welman (18:17.804)
So that's kind of where we're at. know very everybody's excited about Texas as a potential new state and what we could do if we got sports betting or some sort of expanded gambling in there. But you can have all the support in the world. But at the moment the one person who truly can say whether or not a bill gets called says he's not going to do it unless things substantially change. So.

We shall see if this changes anything. You know, I'm curious, especially given how motivated he is against lottery couriers to see if there's competing legislation that's set out to do two different things. On that note, guys, SBC Americas continues to have just piles and piles of legislative updates, including some interesting bills to repeal sports betting.

We had one in Vermont that was covered last week. We've got one in Maryland that should be up by the time you're listening to this pod. So be sure to check that out. Check out everything else in the SBC network and be sure to tune in tomorrow for more insights on what's going on in the industry from iGaming Daily.