How couriers changed the playing field of the Texas Lottery

Sign up for The Brief, The Texas Tribune’s daily newsletter that keeps readers up to speed on the most essential Texas news.

---

After Lt. Gov. Dan Patrick raised questions in February about the use of lottery couriers to sell an $83.5 million jackpot ticket, the little-known segment of the gaming industry has gained new found attention and scrutiny.

But what is a lottery courier?

The companies describe themselves as the “UberEats of the lottery” — with courier being a reference to a delivery service. It’s a way for customers to purchase lottery and scratch-off tickets from a smartphone app, instead of buying them in person at retailers. And it’s a system some feel was born out of trying to circumvent laws that ban people from buying tickets over the phone.

“The user is placing an order within the state of Texas, the courier is receiving that order at the fulfillment center, and purchasing at the retailer — in our case, Winner’s Corner,” said Peter Sullivan, founder and CEO of the nation’s largest courier, Jackpocket, during a Feb. 24 Senate hearing.

In practice, however, Jackpocket and other courier services in Texas are hardly the lottery’s food delivery equivalent. Most couriers own the stores they use to provide customers with tickets, and while it can sell tickets to in-person patrons, it rarely does so, nor are Jackpocket’s couriers making any over-the-counter purchases. Instead, thousands of tickets are directly printed or scanned in the back rooms of its small storefront, Winner’s Corner, with up to a dozen workers at a time processing orders for tickets and scratching and scanning them for hours a day, according to former employees.

“It takes a lot of people to keep the flow going, because once it stops for maybe a couple minutes, like something happens to the system, the system shuts off or machines stop working, [we] would be behind maybe one thousand tickets,” said a former operations associate who worked at Winner’s Corner.

Employees used third-party automatic scratchers to keep up with the demand of how many scratch-off requests were coming in, the former associate and another employee told The Texas Tribune, requesting that they not be named because of concerns about legal retribution from the company. Two other employees who spoke with the Tribune also said they signed company nondisclosure agreements. The ticket scratchers were prohibited in February by the Texas Lottery Commission, an agency spokesperson said.

Upon their entry in Texas in 2019, couriers quickly became the top lottery retailers in the state, breaking Texas sales records every year since and surpassing lawmakers’ expectations. A Legislative Budget Board estimate projected couriers made up roughly $173 million in sales in 2023 — but by the end of that year, courier-affiliated stores had sold over $223 million.

Jackpocket, which is owned by international gambling company DraftKings, operated the biggest market share of Texas lottery couriers from the moment they entered the state — until they voluntarily shut down their services in February as the lottery commission announced it would begin cracking down on the businesses. Winner’s Corner was the highest-selling retailer in 2019 when the store hit $10 million and the top selling retailer in 2024 when it sold $179 million, more than the next 25 retailers combined.

In the first two months of 2025, Winner’s Corner sold $31 million in tickets, more than three times what the top non-courier retailers sold for the entirety of 2024, according to lottery commission data. Orders processed for online customers, on which Jackpocket collects additional revenue in-app fees, made up 99.9% of their 2024 sales, financial information provided to senators by Jackpocket shows.

Recent concerns over the legality of couriers have placed the practice under a spotlight in the Texas Legislature, as over a dozen bills seek to curtail or regulate both couriers and the Texas Lottery. Those concerns are expected to be aired Thursday during a public comment hearing to discuss the Texas Lottery Commission’s new rules banning couriers, reflecting a policy statement they released in late February after allowing the services to operate for years.

The commission itself has faced criticism over couriers and their switched stance, including several state investigations and calls to abolish the lottery altogether.

Lawmakers’ scrutiny comes as courier involvement in lotteries nationally has exploded in popularity in recent years, with the businesses operating in 19 states — and as two major jackpot wins facilitated by courier companies spurred questions about the legality of the services.

“The equipment in question”

There was a point when Jackpocket bought tickets one at a time: when it was one of the first lottery couriers in the United States. In New York in 2015, Jackpocket began by going to traditional lottery retailers like gas stations to pick up tickets for customers.

But by 2016, the growth of the business — and safety concerns for the couriers going into stores with high-ticket orders — required a new process to be made, Sullivan said in an interview with the Tribune. Late that year, Jackpocket reached out to the Texas Lottery Commission about doing business in the state, even as the company was under investigation by New York officials out of concern the practice wasn’t legal.

“As you scale, you needed to have that type of structure and infrastructure, and that probably started around 2016 when we started moving to that model,” Sullivan said.

Business records and lottery sales show Winner’s Corner began selling Texas lottery tickets in early 2019. The process involves two main areas in the fulfillment center for each type of game: in one, dozens of official Texas Lottery terminals scan QR codes with customers’ order information and print draw game tickets rapidly. In the other section of the fulfillment center, scratch tickets are also registered to each customer to track orders and scanned. Next, the tickets are put through a machine that removes the latex from the play area to reveal the game and an employee then checks to see if they’re winners.

Winning tickets under $600 are automatically redeemed and the cash is readily available for customers through Jackpocket’s app; any ticket with a prize greater than that is stored in a fireproof safe room before being mailed to the customer.

Anywhere from 200 to 400 tickets could be processed in an hour, according to former and current employees, and Jackpocket employed at least 20 employees and managerial staff to maintain the intake of tickets. Cameras line the walls of each room to ensure winning tickets weren’t pocketed by workers, and some employees processed orders until midnight, they said.

“We all sat in front of the scanners, and I know when I first started off, it was really crowded,” said a second former courier who worked at Winner’s Corner in 2020. “It was probably at least like 10 people in one room.”

While the lottery terminals printing draw game tickets are made by IGT Solutions, the Texas Lottery’s supplier, the automated ticket-scratching machines are not. The lottery commission confirmed automatic scratchers are now prohibited under the February policy statement, however the statement itself does not explicitly mention anything about third-party machinery.

“The Policy applies broadly to all courier activities, including the equipment in question,” a statement from the commission said.

Some couriers do still utilize retailers they don’t own, but the three largest couriers in the state who make up the Coalition of Texas Lottery Couriers — Jackpocket, Lotto.com and Jackpot.com — all operate similarly small, sparse storefronts in Central Texas.

“I’m only here, until I win the lottery”

The small Lucky Choice store in Converse, a suburb of San Antonio, has just four pieces of furniture in the undecorated space: two shelves with snacks, a cashier’s table and a cooler for drinks. The store, owned by courier Jackpot.com, sells only a handful of items, including plaques that read “I’m only here, until I win the lottery,” but it does fulfill online orders.

Texas law requires that licensed lottery retailers sell items other than lottery tickets, but doesn’t specify a minimum requirement for non-lottery sales. For most traditional retailers like gas stations and grocery stores, tickets are just a small part of their revenue. The courier storefronts in Texas like Lucky Choice, however, are usually small spaces with only a few shelves of product that sell very little non-lottery merchandise.

In February, Sen. Bryan Hughes, R-Mineola, requested the couriers’ sales data during the State Affairs hearing, which the Tribune reviewed. In 2024, Winner’s Corner, which sells board games, sold just under $2,000 of their non-lottery merchandise.

A spokesperson with the lottery commission told the Tribune they don’t know how many courier-affiliated sales are done through their apps or at the counters of their storefronts, which Hughes also requested. In 2024, Winner’s Corner sold roughly $83,000 in storefront lottery sales, just 0.04% of their $179 million total sales that year.

Couriers make more revenue on in-app ticket sales by charging additional convenience or processing fees, which they say are to cover labor and maintenance costs. In Jackpocket’s case, they charge users a processing fee to add funds to the app before purchasing tickets.

Sullivan said any comparison between Jackpocket’s merchandise sales and that of typical lottery retailers is unreasonable because of the online order volume and the premise of their business model. Winner’s Corner processes every order in Texas received through Jackpocket’s app, something Sullivan said they cleared with the lottery commission years ago.

“Due to the fact that we are the largest retailer, it would be unfair to even try to base it that it’s somewhat similar,” Sullivan said. “We all know that it’s being used as a center for processing tickets from across the state.”

While couriers still represent under 10% of the total lottery ticket sales in Texas, their ability to market to a wider digital audience has allowed them to drastically outsell traditional retailers. Before couriers entered the state, no retailer had sold more than $10 million in tickets in any given year — a record Winner’s Corner beat in 2019, their first year in business. The store has been the record-breaking top seller every year since it opened, and in 2023, the six top-selling retailers in Texas were those affiliated with couriers.

After the lottery commission released its policy statement on Feb. 24 restricting couriers, it seized dozens of its machines that produce tickets to draw games from retailers that had more than five, including over 40 from Winner’s Corner. Jackpocket immediately suspended operations in Texas that day, citing an effort to show their willingness to comply with legislators and regulators.

“We wanted to show you that we’re here to work with you,” Sullivan said to lawmakers during the Feb. 24 Senate hearing.

In mid-March, roughly 40 workers at Jackpocket based in Texas were laid off, three sources said. A spokesperson with DraftKings confirmed a “number of employees were affected” by Jackpocket ceasing operations in Texas.

An uncertain future for couriers

Because of the scope of Jackpocket’s business, Sullivan told the Tribune the term “courier” is almost a misnomer.

“The term, ‘lottery courier service,’ it got brought on kind of by the industry,” Sullivan said. “We’re more than just the delivery of the ticket.”

Dawn Nettles, a Texas Lottery expert and owner of lottoreport.com, also believes courier isn’t the right word for Jackpocket. Not because it undersells the range of services they provide, but because the term hides the way their businesses operate.

“As far as the app being called a courier, I really take issue with that,” Nettles said. “There is no delivery service, and in this case it’s even worse because Winner’s Corner is the brick-and-mortar location where they’re actually owned by the app, and then, ultimately, by DraftKings.”

Nettles and other opponents of couriers are skeptical the businesses operate legally, as there currently exists no framework in the state for their practices. Current Texas law explicitly prohibits playing the lottery by “telephone,” which some have interpreted to include apps on phones, while others claim it applies only to phone call purchases.

Sullivan previously discussed publicly how Jackpocket purposefully operated in jurisdictions that lacked clear language on the service’s legality with hopes of working with lawmakers to find how Jackpocket could function responsibly.

“I was scared for a while to get a legal opinion,” Sullivan said in a 2021 podcast interview about initially launching the product in New York. “You don’t want to hear something that says ‘Wow, what you’re doing is illegal,’ but finally we had to lean in and get [an opinion.]”

New York would later become the first state to create courier licenses after banning Jackpocket from operating for five years, a framework Sullivan said his company assisted in crafting. New Jersey and Arkansas also have created legal systems to register couriers.

Some lawmakers have had couriers in their sights since a Texas woman won an $83.5 million Lotto Texas prize using Jackpocket in February. That jackpot has yet to be paid, as Attorney General Ken Paxton and the Texas Rangers, a division of the Department of Public Safety, investigate the win and couriers in the state. Patrick, who is among couriers’ detractors, marked banning the practice as one of his priority bills. Senate Bill 28, authored by Bob Hall, R-Edgewood, is awaiting a hearing in a House committee after passing unanimously in the Senate.

Patrick, Hall and others have voiced concerns about couriers being used for bulk purchase of tickets, sales to minors or players out of state. The fear of bulk purchases — when a sizable amount of tickets in a single drawing is bought — increased after several foreign groups in 2023 used four Texas retailers and roughly 60 lottery terminals to buy 99% of the 26 million possible combinations, winning a $95 million jackpot.

Some of the stores who helped with the bulk purchase are known courier partners, including two that still have active lottery licenses and made sales as recently as March. Members of the Coalition of Texas Lottery Couriers said they have internal restrictions that prevent bulk purchases from occurring. Apps like Jackpocket do have ways of preventing illegal play, including price caps on purchases, ID and facial scans and location-tracking. The businesses claim those efforts make online sales even safer than purchasing tickets in person.

Support for couriers

Couriers are not without support in the Legislature. Rep. John Bucy III, D-Austin, filed House Bill 3201, which would provide a licensing system for couriers including background checks and yearly audits. While Bucy himself has never used a courier, he said his family members regularly use the service and said it’s a “better mechanism” for accountability and transparency.

“We can’t put our heads in the sand when it comes to technological advancements,” Bucy said. “I’m a member of a labor union, I believe in that, but I also think we have to continue to modernize, and we’re seeing this across so many industries where it’s a hard balance, but people want this convenience.”

HB 3201 has not yet been discussed in committee, but Bucy said he’s “positive” the bill will have a hearing to work on particulars. Despite wanting opposite solutions for couriers, Both Bucy and Patrick have publicly admonished the lottery commission for its abrupt policy move to ban couriers while lawmakers try to find a legislative solution.

“I think the main thing to emphasize is, while I and the lieutenant governor strongly disagree on this, we’re both here in the middle of a session working on policy. The lottery commission needs to let that process play out,” Bucy said.

Couriers, too, have taken issue with the lottery commission’s sudden switch, as the businesses had communicated with lottery officials for years about their intent to operate in Texas. In a 2022 letter to Jackpot.com CEO Ashkay Khanna, then-deputy and now current Executive Director Ryan Mindell told the company it didn’t need a lottery license if it did not operate a store. While Jackpot.com initially launched without its own retailer, it later opened Lucky Choice, which is licensed.

Mindell has declined several requests for interviews since February through a lottery commission spokesperson.

The lottery commission will have a public comment period Thursday to discuss their new regulations on couriers. The commission also currently has seven open investigations into courier-affiliated retailers for violations of lottery rules and statutes. Jackpot.com joined Jackpocket in suspending state operations in Texas, however as of Tuesday, Lotto.com, the second-highest selling courier in the state, was still accepting orders on its app.

---

Tickets are on sale now for the 15th annual Texas Tribune Festival, Texas’ breakout ideas and politics event happening Nov. 13–15 in downtown Austin. Get tickets before May 1 and save big! TribFest 2025 is presented by JPMorganChase.