.svg)
Lottery courier services have come under increased scrutiny following several controversies in Texas that have raised questions about their operational practices, while putting pressure on state legislatures and lotteries to either regulate or prohibit them.
The Arizona Lottery Commission on Thursday (April 10) chose to regulate couriers by granting the state lottery the authority to amend its rules to authorize courier services to operate in the state while prohibiting retailers from selling lottery tickets to courier services without lottery approval.
“This is kind of a way for us to both authorize the retailer that is working with the courier and authorize the courier that is working with the retailer,” said Arizona Lottery executive director Alec Thomson.
Thomson told commissioners that couriers such as DraftKings-owned Jackpocket have been operating in Arizona without incident since 2019.
“We have a number of couriers operating in the state of Arizona, and … it’s growing [so] fast that they’ve contributed to the growth of lottery sales in many cases,” Thomson said.
Thomson added that regulating couriers was about making sure they are operating in the state within the guidelines of state law and not violating tribal-state gaming compacts.
In addition to Jackpocket, Lotter US, and Lotto.com are among the courier services operating in Arizona. Messages left with each company Thursday were not returned.
Lottery courier services are third-party companies that allow customers to order official lottery tickets through a mobile app or website. The courier’s staff then purchases the physical ticket from an authorized retailer and provides the customer with a scanned copy of the ticket.
In exchange, the courier charges a convenience fee based on player deposits or the value of the ticket.
Lottery couriers are fully regulated in just two states, New Jersey and New York, where they are required to be registered and licensed.
Elsewhere, lottery regulators have pointed out that the courier may not be an official lottery operator or retailer, even though leading couriers operate in some 18 states and the District of Columbia.
Thomson said Arizona's forthcoming regulations would “gives us that ability to work directly with them to both preserve the integrity of games … and then, of course, to grow sales”.
“I think the majority of couriers are operating, both in Arizona and on a national scale with a high level of integrity,” Thomson said.
Texas, Indiana Moving Against Couriers
Still, Thomson confirmed there have been some situations, including a recent one in Texas, that has raised some questions and “increased the urgency” to pursue regulating the industry.
The Texas Lottery Commission issued a policy statement in February to ban couriers from operating in the state following intense criticism from lawmakers. Commission executive director Ryan Mindell warned that the commission will revoke the license of any lottery retailer that works with a courier service.
Couriers attracted attention from Texas policymakers, including Governor Greg Abbott and Lieutenant Governor Dan Patrick, both Republicans, after a Texas resident won an $83.5m lottery prize in early February through a ticket purchase using Jackpocket’s platform.
A $95m Lotto Texas jackpot was also won in April 2023 by a player who made a bulk purchase of tickets that included nearly every possible number combination. Abbott ordered the Texas Rangers to investigate both incidents for any potential wrongdoing.
The commission’s decision to ban couriers is a reversal of its position in 2016 when it told retailers and lawmakers it lacked the authority to regulate couriers.
The Texas Senate approved a bill in February to clarify that courier services are prohibited under state law, although the bill has yet to be taken up in the House.
In Indiana, the House of voted 82-10 on Tuesday to pass Senate Bill 94 to prohibit lottery couriers in the state. The broader gambling bill was returned to the Senate on Thursday with several amendments, including removing mentions of gaming at racetracks, casinos, tribal gaming, or tribal-state compacts.
The bill would specify that Indiana State Lottery Commission cannot operate or authorize the operation of any lottery couriers. Current law bans retailers from working with a courier service unless authorized to do so by the lottery commission.
If the amended bill is approved by the Senate, which approved the bill by a vote of 44-5 in February, then the new lottery restrictions go into effect July 1.
Thomson said Arizona has not seen any of those issues that led to the ban on couriers in Texas. He added that any proposed rules would eventually have to be submitted to the governor’s regulatory review council before taking effect, but no timeline was announced during the meeting on Thursday.
See also: U.S. Regulatory Review: Lottery Couriers
