Critics claim that lottery courier CEOs such as Lotto.com’s Thomas Metzger lurk in the shadows, enable cheating and are a pox on the communities where they operate.
If that is the case, Metzger is arguably the most exceedingly polite pox in the industry.
Couriers seek permission before entering states
“We’ve never gone into a state without explicit permission from that state in writing. So, in the 12 states that we’re operating in, we walked through the front door,” Metzger told SBC Americas during the SBC Summit Americas conference.
He is also a man willing to put himself out on a limb at a time when one of the biggest lotteries in the country is mired in scandal and many are trying to scapegoat couriers as the problem.
While the Texas legislature debates how to reform, or even abolish, the lottery, the Texas Lottery Commission took steps to revise regulations and force couriers that had been operating in the state for years out of the market.
Metzger did not take the ban sitting down though. Lotto.com filed suit against the lottery, submitting a wealth of evidence that lottery executives were fully aware of how couriers operate and that Metzger expressed his concerns about the suspicious bulk purchasing at the heart of this scandal to lottery officials as it was taking place.
Evidence includes written correspondence between both Lotto.com and Jackpot.com from lottery officials such as the now-resigned Ryan Mindell clarifying that couriers were both clear to go in the state and technically not something the Texas Lottery could even have a say over, as the organization regulates retailers, not delivery services.
Metzger advocating for lottery courier regulation
While that invitation was enough for Lotto.com to enter the state, if Metzger had the option, he would like even more oversight.
“We’ve been in favor of regulation for years, since we started operating.”
For someone desperate for both permission to do business and more government intervention, the misconceptions about couriers stemming from mainstream media coverage of the lottery controversy in Texas can be exceedingly frustrating.
“We feel like, unfortunately, we’re a little bit of a victim of circumstance,” Metzger noted. “There’s this misconception in Texas that we were somehow operating in the shadows.”
Metzger noted that is not the only misconception about the scandal. Lottery officials like former directors Mindell and Gary Grief presented testimony to lawmakers suggesting they were unaware of what couriers were doing. As Metzger explained, the lottery has detailed oversight over what ticket retailers are doing in the state.
“Every lottery in the country has very sophisticated central systems that monitor every terminal in the state,” he said.
“The lottery most certainly knew how many terminals we had, what our sales were, what products we were offering, and we had a very, very conducive working relationship.”
Despite this oversight, a group was still able to bulk purchase almost every possible combination of numbers via a retailer who ordered extra machines on a unique rush job that the lottery delivered.
“The bulk purchase that occurred in Texas could have never been done via lottery couriers. We have spending limits in place,” he explained. “We couldn’t have purchased 25 million tickets in three days. It would be physically impossible.”
Questions remain about Texas Lottery oversight
He also pointed the finger at Texas Lottery officials for having the ability to nip this issue in the bud and not only not stopping it, but enabling it.
”If you see a huge spike at one retailer, you could push a button and shut that terminal off. In the Texas Lottery’s case, they did the opposite. They gave extra terminals to the retailers that were working with that bulk purchase.”
Given those accusations, it is no surprise lawmakers are pursuing a bill that would put the state’s lottery in new hands, while other bills, like one that expressly legalizes couriers in the state, lay idle.
Even though the bill gaining traction in Austin prohibits couriers, Metzger is nonetheless optimistic that people will learn from this incident.
“The silver lining here is that now states that have embraced couriers, states that we work closely with, are going to come forward with regulations that will protect our business for years to come and also protect the incremental growth of customers, sales and profits that we’ve delivered for state lotteries.”
During an SBC Summit Americas panel on lottery innovation, Metzger and Jackpot.com Chief of Staff Mike Silveira argued that many in the vertical are still not seeing the value couriers can bring to their product.
“Less than 10% of lottery transactions can happen online today. When I’m thinking about acquiring another customer, I’m not thinking about taking a customer from Lotto.com or Jackpocket or another lottery courier. I’m looking to find a customer that doesn’t realize that they can order lottery tickets online,” Silveira noted.
Metzger agreed the U.S. is falling behind other countries when it comes to bringing lottery games online and into the 21st century. Some claim couriers cannibalize other retailers, but Metzger pointed to the U.K., where lottery sales are on the rise and he says there is no sign retail suffers as online sales grow.
Couriers believe digital lotto growth remains enormous opportunity
A trio of couriers, Lotto.com, Jackpot.com and Jackpocket, have banded together to form a trade group, the Coalition of Texas Lottery Couriers. On stage at SBC Summit Americas, it was also clear that Silveira and Metzger were very collegial with each other even though they are competitors.
With $120 billion in U.S. lottery sales a year and a fraction of online penetration, the view is there is room for many to succeed, including state lotteries themselves.
Metzger pointed out that sales are not the only area where lotteries benefit from the presence of couriers. Major couriers regularly market and advertise big winners and ease of use, but really what they are marketing more than the apps they offer are lottery tickets in general.
Despite this, some states took action to prohibit the vertical this legislative session, including Indiana.
That arguably comes at a cost though. The Hoosier Lottery reported a 9% decline in sales last year and anticipates a 4% drop in revenues for this fiscal year. While Hoosier Lottery Executive Director Sarah Taylor pointed out huge jackpot payouts played a role, the question from courier advocates remains:
Is someone asking to come into your state, advertise your product and bring it online in a digital-first world really the nuisance some claim it is?
