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Lottery courier services should have to earn the privilege of participating in state lottery sales and be disqualified if they also distribute U.S. tickets internationally, according to a set of best practices outlined in a report commissioned by leading courier Jackpocket.
The policy recommendations are among a number of findings in a report produced by consultancy Spectrum Gaming Lottery Group on behalf of Jackpocket that is expected to be publicly released as soon as Tuesday (July 18).
Courier services operate by enabling players to create online accounts and order state lottery tickets through their phones. Tickets are then acquired by the couriers from licensed state lottery retailers, with players either receiving winnings directly into their accounts or a notification when they win a larger prize.
Jackpocket and several competing lottery courier businesses are today active in more than a dozen states but are only specifically regulated in two. The company and rival Lotto.com are also the only two licensees currently in New Jersey and New York.
“We are hopeful that the industry can achieve consensus on a set of actionable best practices that can hold market participants accountable within the confines of their state’s existing regulatory structures,” said Jackpocket CEO Pete Sullivan.
“Earning the support of state lotteries to establish best practices will assist in achieving that consensus,” Sullivan told VIXIO GamblingCompliance. “For our industry to contribute to the sustainable growth of state lotteries, we all have to get behind a set of best practices.”
The Spectrum report recommends that state lottery commissions create “sufficiently high barriers for entry of lottery couriers into the lottery industry to ensure that all participants have the experience, financial wherewithal and operational integrity to operate legally.”
According to the Spectrum report, lottery courier services should at least have to submit to some kind of formal approval process akin to obtaining a general lottery retailer license.
State lotteries also should provide some oversight of courier operations by appointing dedicated staff and by reviewing and approving their internal control processes.
Regarding the international operations of lottery couriers, the Spectrum report says that state lotteries “need the ability to reject or disassociate from couriers that have flouted rules regarding the illegal sale of tickets to foreign jurisdictions,” to avoid damaging their own credibility if jackpots are won by overseas players.
Although Jackpocket operates exclusively for players in participating states, more than one rival courier service has a sister operation that enables players in international markets to obtain entries to state lottery games such as Powerball and Mega Millions.
Further policy recommendations from the report mirror some of the regulatory requirements already in place in New York or New Jersey.
For example, the Spectrum report recommends that random number generators and other software used by couriers be submitted for approval by independent testing labs.
The report also recommends that all lottery courier orders be fulfilled on a one-to-one basis and that an image of the ticket is provided to each customer within a reasonable timeframe to ensure transparency for the consumer.
Other policy recommendations include ensuring effective know your customer (KYC), responsible gaming and anti-money laundering policies, as well as appropriate protocols for customer data and ticket storage. Lottery couriers should also agree to coordinate their marketing activities with state lotteries to avoid misleading consumers.
Jackpocket is supportive of formal regulations for lottery courier services, as New York and New Jersey have already adopted, but believes industry best practices should be applied for those states where such formal rules do not currently exist.
“We understand the political realities of new policymaking on gaming issues,” Andrew Fries, senior vice president of public affairs, told VIXIO. “Adopting a set of best practices gives states a flexible, yet assertive path for protecting the integrity of the lottery and consumers alike within existing policy boundaries.”
Although several have expressed legal or other concerns, policymakers and lottery regulators in a number of states have so far proven to be receptive to courier services as a means of facilitating the sale of lottery products to new players.
Lottery couriers have been expressly prohibited in both Virginia and Wisconsin, however.
The Texas legislature also recently included a policy rider in the state’s 2023-25 budget law to express its opposition to the Texas Lottery Commission enabling courier services to operate in the Lone Star State despite a prohibition on lottery sales by telephone.
Texas Republican Governor Greg Abbott last month called that policy provision unconstitutional, but he was not able to remove it from the budget law that he signed in June.
