A recent Texas lottery scandal uncovered by the Houston Chronicle may have massive implications throughout The Lone Star State. In fact, the state has already changed lottery rules. But many believe this wild issue may impact the future of sports betting in Texas.
This focus on how the state’s lottery setup may affect the legalization of Texas sports betting is not at all surprising. Everything related to gaming and state legislature links back to sports betting and casino expansion in Texas. This is a primary focus for voters, state officials and experts in the industry alike.
And that makes sense. The Lone Star State projects to be one of the five most lucrative sports betting markets in the United States if and when it’s legalized. Since almost 40 states have now legalized sports betting in some form, it is understandable why so many are wondering whether a flagship market will follow suit in the near future.
As ever, the timeline for doing so remains hazy. Some believe sports betting in The Lone Star State could be approved for a 2026 ballot measure. Others are less optimistic. Most recently, a marketing research firm in the gaming sector predicted sports betting in Texas wouldn’t be legalized until 2028.
Regardless of when it happens, though, another question has always hung over the issue: Will sports betting in Texas be regulated by the state lottery? Or will they require a gaming commission to oversee it all?
In theory, this is an issue that should be tackled once another piece of Texas sports betting legislation is proposed. However, the latest drama involving the Texas State Lottery may have already given us an answer.
Investigation Shows Texas State Lottery Helped Wealthy Investors
Over the summer, the Houston Chronicle’s Eric Dexheimer launched an investigation into how the Texas Lottery was favoring the ultra-wealthy. What he found was staggering.
Here’s Dexheimer’s own recap of the saga from a discussion with the TexasStandard.org:
“So this particular draw happened in April of last year. It was a Lotto Texas draw, which requires the players to pick six numbers. And if you get all six numbers right, then you win the jackpot. By April of last year, there had been 93 draws without a jackpot winner, which meant that the jackpot had soared to $93 million. And for institutional or wholesale or syndicate buyers – there are a number of names for them – there is a certain set of mathematical circumstances that make it worthwhile for them to literally buy up every combination. If there are six numbers, you must purchase 25.8 million combinations, which is what one buyer did in this draw. And they ended up winning the jackpot, which was a one-time payout of $57.8 million.
“[The lottery] said that no laws were broken. There were no laws preventing either the retailers from selling these tickets or a single buyer from buying all of them. Subsequent to the draw, they did concede that it affected the perception of fairness at the lottery. And also, if the jackpot is advertised at $95 million and a single person is already guaranteed that he will win it, then the rest of us are only playing for half that amount.”
The Texas Lottery has since changed its rules to avoid situations like this. Those adjustments are also aimed at ensuring pop-up lottery sellers don’t hold as much power. But how might this impact sports betting in Texas?
It Is Pretty Clear Now That Sports Betting in Texas Will Require A Separate Gaming Commission
As online sports betting in the United States continues to gain popularity, many places have formed separate gaming commissions to regulate the industry. However, plenty of states still run legal sports betting through their lottery departments. It is both convenient and simpler. In particular, it can streamline the launch of sports betting in the USA.
Still, it can have some downsides. And sports betting in Texas is highlighting them without actually being legalized.
Spotty resources can make it hard for lottery departments to oversee not just the lottery itself but also casino gaming and sports betting. If you are stretched to thin, the thinking goes, infractions and broken laws will fall through the cracks.
Clearly, the Texas State Lottery is already having a tough enough time regulating itself. Sure, they initially said no laws were broken. But how does a single buyer go about purchasing 25.8 million tickets without raising any institutional red flags?
Indeed, the lottery has since remedied the issue. But regulation isn’t just about reaction. It’s also about prevention. You need the resources and foresight to identify risks and stop them before they happen.
Expect the Lottery Scandal to be Discussed During the Next Round of Legislative Meetings
To be fair, people will always find workarounds no matter how much regulation is in place. We have seen it time and time again in the online sports betting industry.
However, this particular problem doesn’t lend itself to confidence in the state’s lottery department. Can they really handle sports betting in Texas when they’re obviously having issues with their own sector as things currently stand?
The sheer enormity of the market for sports betting in Texas should be enough to spark a discussion. Remember, we’re not talking about a lower-populated state that won’t see a ton of action. Heck, experts believe the offshore sports betting market in Texas is already a billion-dollar industry. Just imagine what will happen when a larger portion of the population has easier access to online sportsbooks throughout the USA.
Once debates over the future of sports betting in Texas resume next winter, we expect the lottery scandal to take a leading role. This isn’t to say a sports betting bill will be passed. But we would be shocked if this issue doesn’t shape the policy for sports betting in Texas once it’s inevitably legalized.
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