The target for the ire of State Sen. Paul Bettencourt, R-Houston, was the Texas Lottery Commission and its new executive director, Ryan Mindell.
Bettencourt pounded the desk, demanded answers and at one point said: “You know I haven’t gotten mad this whole session, but I’m about to.”
Bettencourt usually makes appearances in this column explaining property tax laws, which he writes. This hearing was supposed to be about the Texas Lottery Commission’s annual budget request. Routine stuff. Not this time.
The hearing veered considerably to April 2023 when the lottery allegedly aided and abetted a group based out of gambling mecca Malta that bought most of the $1 Lotto Texas tickets for a winning $95 million jackpot.
This syndicate bought 25 million tickets through so-called lottery couriers who take ticket orders. Not much of a surprise when the syndicate won.
The lottery is not supposed to be sold to anyone out of state or by using an electronic device or with an app or by adding a surcharge — all of which happened at that fateful 2023 drawing.
The lottery is supposed to be sold person-to-person over the counter at a licensed retailer using cash or a debit card.
That’s not what happened. Here, the bulk purchasing syndicate bought $25 million in tickets in a mere three days, leaving the remaining approximate $1 million in tickets for hapless Texans who had no idea what they were up against.
Much of the blame for this falls on Gary Grief, the longtime lottery director who resigned in April and refused to cooperate with state auditors who declared the lottery is “not fully trusted and under scrutiny.”
With Grief gone, his successor and longtime protégé Mindell becomes the face of this growing scandal. And his face at this budget hearing kept dropping as Bettencourt zeroed in.
Money Laundering?
At the hearing, Bettencourt asked Mindell if the syndicate used the lottery to launder ill-gotten money.
Mindell refused to “commit” to the lottery being involved in money laundering, which set Bettencourt off.
“Money laundering is the problem,” the senator insisted. “We can’t gloss over this. We can’t look the other way.”
He added, “Normal consumers don’t go and buy $25 million in $1 tickets. ... You’re not recognizing the obvious. I’m going to ask again. Is the lottery involved in money laundering?”
After a pause Mindell said, “I can’t answer that question.”
Bettencourt, his voice rising, demanded to know “what type of leadership he is showing this committee if he won’t answer a simple question like that?”
In a final statement, the senator said, “I do not ever want an agency head ever to come into this building again and have to use neutron weapons ... to get an obvious question answered.”
Senators Go on The Attack
Other senators piled on, too.
State Sen. Lois W. Kolkhorst, R-Brenham, suggested the Texas Rangers investigate.
State Sen. Carol Alvarado, D-Houston, said, “We’ve got an agency that is in disarray and broke the public trust.”
State Sen. Charles Perry, R-Lubbock, said to lottery officials, “I ain’t buying what you’re selling.” He added, “The money laundering aspect is real. ... You’re kind of addicted to the dollars.”
State Sen. Bob Hall, R-Edgewood, who introduced an unsuccessful lottery reform bill two years ago, was critical of how minors can use apps to illegally buy game tickets.
‘Guard Rails’
As first reported by the Houston Chronicle, financiers in London and Malta paid for most of the tickets, spending $25 million and winning $58 million after taxes. What are the odds for the little guy buying a $1 ticket at a gas station and beating the syndicate?
Former director Grief favored these emerging courier services in which buyers order through lottery couriers rather than licensed retailers. Grief led a change in the rules. Mindell said he has installed “guard rails” to make sure this never happens again.
Grief didn’t respond to phone calls from The Watchdog.
Couriers are represented by the Coalition of Texas Lottery Couriers, which released a statement endorsing changes that could be made by lawmakers.
Their service, the statement said “is particularly helpful to those who cannot easily make a trip to the store, such as the elderly, those with infirmities, or people who live in remote areas of the state.”
Something we learned at the finance hearing, the winning $95 million ticket was not even printed for several days after the winner was chosen. That seems highly irregular.
Dan Patrick Trip
Lt. Governor Dan Patrick visited Winners Corner, an Austin lottery store where an $83 million winning ticket was sold this month. The store is both a retailer and also connected to a courier.
In a video he posted, Patrick said he was not allowed to take video in a back room, but he was allowed inside and reported that he saw “terminal after terminal after terminal.”
He complained, “This was not the way the lottery was designed to operate. It was designed to operate by someone going into a store, giving some cash and getting a ticket back — not from machines behind walls and not from a courier service and a retailer all being connected.
“So when someone wins a ticket for $83 million it makes everyone ask a lot of questions. And this isn’t the first time something like this happened.”
“The bottom line,” Patrick said, “is if we are going to have confidence in the lottery, we have to be sure that no one has an advantage.”
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