The Scheme That Broke the Texas Lottery

I’m Texan and can say these politicians are scum. They find blame anywhere but internally. It’s all very hand wavy clown club manufactured outrage type of rhetoric.

The fact is the lottery designed a game that allowed this completely legal and compliant “scam” to take place. They need to scrutinize their internal game making math literacy before they blame people for spotting and profiting from their mistakes.

Is there any value to state lottoes as a containment strategy? Like, letting people gamble via legal, approved channels weakening the black market and therefore the mob?

This one is paywalled but when I read about it earlier, the problem was that the Texas officials had allowed these people to break the rules of the lottery in order to implement the scheme. So they were given an edge over people who were following the rules.

Another article on this: https://archive.ph/DOCG0

Personally I think it's fair if you buy the tickets the way any random person might try to buy all the combinations, which would be to pay people to go buy combinations at gas stations.

But that's not how this worked in this case:

> The Texas Lottery Commission helped in several ways behind the scenes. Prior to the draw, it filled rush orders from the retailers requesting dozens of extra terminals — even though three had sold few, if any tickets in the previous months.

>The agency also did not challenge organizers’ method of rapidly entering millions of ticket orders into state terminals. Their use of personal iPads and preprogrammed QR codes appeared to skirt lottery regulations.

If the lotto commission is fine with groups purchasing the lottery, they should make the mechanism for purchasing the lottery equally available to everyone.

Far more people than Nettles think this was unfair and there were definitely laws broken and skirted. That is why there is a scandal.

> In the aftermath of the 2023 bulk buy, Texas politicians put much of the blame on the couriers. The couriers, for their part, have argued that they’re being scapegoated to deflect attention away from broader issues within the Texas Lottery Commission. In any event, the freewheeling atmosphere in Texas seems to have attracted businesses with questionable pedigrees. Lottery.com, which ended up managing the on-the-ground logistics for the 2023 lottery plan, relocated from California to Texas in 2017.

> Lottery.com seems to have struggled, initially. One potential investor, who visited the Lottery.com’s offices in Austin, told Bloomberg Tax, “I said, this isn’t a corporate office; this is a failed 7-Eleven with three goddamn machines.” In 2022, an investigation found that the company had sold more than half a million tickets to out-of-state players, which is illegal. Three top executives left the company. Two of them, Ryan Dickinson and Matt Clemenson, have since pleaded guilty to separate securities-fraud charges. That same year, the company stopped selling lottery tickets, its license as a lottery retailer in Texas was suspended, and its app was removed from the Apple and Google stores.

Texas law prohibits sales to out-of-state players. Do you really not see how a foriegn backer using a sketchy third party and sketchy techniques to purchase tickets and make profit off Texans who play for fun is clearly unfair?

There's a number of stories like this, notably this reminded me of the Press your Luck Scandal where Michael Larson obsessively recorded and watched a games how to find patterns: https://en.m.wikipedia.org/wiki/Press_Your_Luck_scandal

It's unfair because they didn't buy tickets the way normal people do. Lottery machines are supposed to be in regular places of business, like gas stations or grocery stores. Companies called couriers popped up years ago that skirt this requirement by having a token storefront, while their real business is selling lottery tickets on the Internet, connected to physical tickets they print in their store. Secondly, the courier the buying group used requested additional ticket printing machines in the weeks leading up to the drawing, an unusual request that seemingly was not scrutinized at all by the TX lottery commission. So not only did the buying group have to use a method to buy tickets that already is unfair (and goes against the spirit of lottery requirements that tickets must be sold out of normal stores), they had to conspire with a courier to get enough machines to print out all the tickets in time. I think it should be obvious this kind of process is not available to the vast majority of Texans, even those with the financial means to do it, so yes - it is unfair.

We had an issue like this with a small office lottery at work.

So our "setup" was simple. Our national lottery has a 'bonus ball' mechanism. Each participant in the office lottery bought a number. If this week's bonus ball is your number, you win the pot. If no-one wins, the pot rolls over.

The issue we hit was people joining mid-roll. Say we have 10 players, rolled over 9 weeks putting $90 in the pot. On week 10, a new player joins, $11 joins the pot, and the new player wins $101 for their $1 in. This is legally fair, but everyone with $10 in the pot feels robbed by the $1 newbie.

We took the easy out and only accepted new members during a 'fresh' pot - which isn't practical for a state lottery.

But it shows the difference between legal fairness and perceived fairness. Someone being able to buy every combination is game-breaking - who would play a lottery where millionaires are guaranteed to win? But roll-overs twist the math until it pays off, and now everyone who's entered in the previous weeks is unwillingly playing a lottery where millionaires are guaranteed to win.

It's not impossible to fix either - if you want to fix it. Cap wins at $x and return the remainder to the pot; keep the maximum prize far under the point where buying combinations pays off, and you can keep offering that maximum prize until the roll-over is exhausted.

But if you're the one making a profit from the lottery, you don't want to fix it. Massive jackpots are a feature - they encourage more participants, more spending, more profit.

And it does seem unfair to protect a mechanism that's so easily exploited, just because it attracts more people to be exploited. And it really can't be good for the long-term health of the game, if people know that roll-overs will be exploited.

I would like to read the article you describe.

After spending a few days in Vegas recently, I can confirm whoever thinks "gamblers are mystics at heart" only knows either a tiny bit about gambling or mysticism, but not both