Unusual requests to the Texas Lottery from vendors seeking to scale up on ticket processing machines will now face heightened scrutiny. This follows a recent incident where a New Jersey-based syndicate walked away with a $95 million jackpot after purchasing 25.8 million tickets from pop-up vendors.
A gaming syndicate managed to have 25.8 million Texas Lottery tickets processed by pop-up vendors who requested additional terminals specifically for this scheme. In response, the legislature moved to tighten this loophole. From now on, any requests from vendors for large quantities of processing equipment will be directed to the Texas Lottery’s executive director for thorough investigation, particularly when those vendors lack a history of selling large numbers of tickets.
State Senator Tan Parker (R-Flower Mound) remarked that the integrity of the lottery was compromised due to the jackpot win. After 93 rollovers, the April 22, 2023 lottery draw reached a point where it became mathematically exploitable. The jackpot stood at $95 million, which implied that purchasing every possible combination of numbers – or 25.8 million tickets at a dollar each – would virtually guarantee the jackpot along with most of the other prizes. This is precisely the approach taken by the syndicate.
After taxes, the prize amounted to $57.8 million, meaning the syndicate anticipated a $22 million profit from the jackpot alone. Even in the scenario of sharing the first prize with another winner, the syndicate would still garner a profit of approximately $3 million, not including the additional prizes shared with other winners. A three-way split would have posed a significant risk, but the likelihood of such an outcome was minimal, making the gamble an acceptable risk for the syndicate.
The main challenge was logistical: purchasing 25.8 million tickets for a draw that typically only sells one to two million tickets per week. The state legislature deemed the process far too simple. Every ticket bought by the syndicate was processed at merely four outlets, three of which had sold no tickets in the months prior to the draw, according to an investigation by The Houston Chronicle.
This required each outlet to order sufficient equipment from the Texas Lottery to process millions of tickets within the three days between the draws. The state agency readily complied. Lottery officials noted that there is no rule against purchasing all combinations of tickets. However, lawmakers argued this week that the syndicate’s actions violated the spirit of the lottery, and they did not hold back in their criticism of the Texas Lottery.
State Representative Matt Shaheen (R-Plano) accused the agency of “collaborating” with a “group of sophisticated players.” He emphasized that a significant percentage of lottery sales in Texas come from lower-income individuals, suggesting that these individuals were exploited, as reported by The Chronicle.
