Lone Star Crackdown: Amidst a Patchwork of State Regulations, Texas Moves to Ban Lottery Courier Services | Troutman Pepper Locke
In a significant regulatory shift, the Texas Lottery Commission has enacted an immediate ban on lottery ticket courier services in the state, effective February 24. This decisive move marks a stark departure from the commission’s previous position that it lacked jurisdiction over these couriers. State officials in Texas backing the change assert that groups who buy mass quantities of lottery tickets using unregulated lottery couriers avoid safeguards in the regulatory system and undermine public trust in the lottery system.
Lottery courier services are a relatively new industry in the U.S. and in most states operate in an unregulated capacity. These services allow customers to order official lottery tickets through a mobile app or website. The courier company’s staff then purchases the physical ticket from an authorized retailer on the customer’s behalf, and provides the customer with a scanned copy of the ticket. In return, the courier charges a fee, or commission. Importantly, the courier is not itself an official lottery operator or retailer in most cases (though in some cases, critics allege they may be affiliated with retailers).
The rapid expansion of this market has highlighted the tension between the innovative business model of courier companies and the traditional, tightly regulated framework of state lotteries, leading to a patchwork of responses to these operators at the state level.
This article (1) discusses the action by the Texas Lottery Commission and subsequent legislative action, (2) provides an overview of lottery ticket courier services across the U.S., and (3) concludes with a discussion of the ramifications of the Texas action for the industry as a whole.
Texas Implements Ban on Lottery Ticket Courier Services
On February 24, the Texas Lottery Commission announced a new policy effectively banning lottery ticket courier services in the state. Commission Executive Director Ryan Mindell issued a policy statement declaring that such third-party courier services are not allowed under Texas law. Mindell warned that the commission will enforce this prohibition by revoking the license of any lottery retailer that works with a courier service. The new policy stance comes as a surprise, as the commission had previously taken the position that it did not have jurisdiction to regulate lottery couriers in the state.
In implementing the ban, Texas officials cited concerns about the integrity and security of lottery operations. State officials have long argued that unregulated couriers can circumvent safeguards, including age and location restrictions, and undermine public trust. Alongside the commission’s policy statement, Governor Greg Abbott announced investigations into two recent jackpot wins facilitated by courier services. Shortly thereafter, Texas Attorney General Ken Paxton announced that his office was also investigating these winnings.
The policy took immediate effect, and the commission has set in motion a formal rulemaking process to solidify the prohibition in state lottery regulations. An official news release from the commission emphasized that the move aligns with legislative efforts and leadership concerns about fairness in the lottery system. It also explained how couriers operate outside any state oversight, which, the commission claims, poses risks of “potential crime and other harms” to the public.
Texas lawmakers were quick to reinforce the commission’s stance. Just days after the policy statement was issued, the Texas Senate unanimously passed Senate Bill 28, which prohibits the purchasing or ordering of lottery tickets via the internet or a mobile application, as well as selling or accepting an order for such a ticket for compensation. The bill’s author, Senator Bob Hall, and all 31 state senators supported the measure amid bipartisan agreement that couriers threaten the transparency of the lottery.
Lawmakers accused courier companies of exploiting loopholes — for example, potentially enabling sales to minors or sales across state lines — which are illegal under current law. Hall argued that couriers were likely already illegal under existing statutes, and SB 28 simply makes the ban explicit and easier to enforce. With SB 28’s unanimous Senate approval, at least one of house of the Texas legislature has signaled that it supports a hard-line prohibition on lottery ticket courier businesses in the state. Notably, a contrasting proposal in the Texas House, which seeks to regulate couriers by imposing a licensing and regulatory regime, has not yet advanced to committee.
Overview of the Lottery Courier Industry in the US.
From a legal and regulatory perspective, only a few states have explicitly addressed lottery couriers in law or regulation. New Jersey and New York are the leading examples of states that have embraced a regulated model. In both states, couriers are licensed and must adhere to strict rules — for example, ensuring customers are of legal age and physically present within the state, and following responsible gaming and advertising standards. These frameworks treat courier services as an extension of the lottery system under government oversight, providing legitimacy to the business model.
Other states, however, have resisted or taken action against lottery couriers. Some state regulators view unlicensed courier operations as facilitating illicit lottery sales. For instance, the attorney general of California issued an opinion in 2022 concluding that lottery courier services are prohibited under California law. Last year, the California Lottery warned that any retailer collaborating with a courier would face termination of their lottery contract and stressed that any ticket purchased via an unauthorized online courier is ineligible to claim a prize, thereby nullifying wins for players who use these services. Similarly, in 2024, regulators in Florida terminated a courier’s operations for unlawfully selling lottery tickets to consumers in the state.
Meanwhile, some jurisdictions fall in between — allowing courier services to exist, but in an ambiguous legal position. Prior to its recent ban, Texas was one such state. As another example, in Colorado, although a 2023 audit concluded that unregulated courier services lack sufficient oversight and pose risks to consumers, the state has not moved to prohibit these operators. Instead, the commission has begun a rulemaking process to “provide clarity to retailers and the public as it relates to couriers and the obligations of Lottery retailers who choose to sell to couriers,” seeming to indicate that lottery retailers, and not couriers, would bear the brunt of compliance.
Why It Matters
The disparate treatment of lottery couriers in states across the U.S. reflects a national patchwork of responses to this emerging industry. Texas’ decision to ban courier services outright is one of the more stringent approaches, coming on the heels of high-profile controversies and political pressure. It puts Texas in the camp of states that have opted to restrict or eliminate lottery couriers to protect the traditional state-based lottery system and its players.
On the other side of the spectrum, a few states have shown support for regulated courier services as a way to modernize lottery sales safely. The business implications in supportive states are significant: companies have attracted millions of users and venture capital investment, positioning themselves as official partners of state lotteries rather than underground operators. Regulated couriers can drive additional revenue to state lotteries by reaching customers who prefer the convenience of a smartphone app, all while contributing to state funds through increased ticket sales.
The outcome in Texas — a high-profile rejection of the courier model — may significantly influence these debates. Industry analysts have noted that Texas’ move could be a catalyst for more uniform regulation (or prohibition) of lottery couriers nationwide. In any case, as of today, the legal landscape for lottery courier services remains in flux, with starkly different approaches emerging across the U.S. Whether through bans like Texas’, or through licensing as in New York and New Jersey, state governments are clearly considering how to assert control over the sale of lottery tickets in the digital age. The outcome of these decisions will shape the business prospects for courier companies going forward.
