A new lawsuit accuses the Texas Lottery Commission (TLC) and former director Gary Grief of complicity in fraud in relation to a 2023 lottery jackpot win by an out-of-state investors’ group.
According to KVUE ABC, the lawsuit alleges a “long-running fraud scheme” that was executed in collaboration with former lottery courier service, Lottery.com, as well as its executives.
Dawn Nettles, founder of LottoReport.com, filed the lawsuit last week in Harris County District Court. It names the TLC, Grif, Lottery.com, Rook TX, and IGT Solutions as defendants.
Attorney Manfred Sternberg testified before the Texas Senate Finance Committee last week, and detailed the accusations.
“My client believes that this criminal conspiracy started in 2017 when Gary Grief traveled to California to lobby the founders of Lottery.com to relocate their business to Austin. From that moment on, until Mr. Grief’s sudden retirement in early 2024, the Lottery Commission and Lottery.com became a combined single criminal entity.”
April 2023 Texas Lotto jackpot incident a focal point
The lawsuit brings a lot of attention to the April 2023 Lotto Texas drawing that was worth $95 million. A group of investors that called themselves “Rook TX,” purchased nearly every outcome of the game in order to win the jackpot. The group utilized couriers in order to print out the nearly $26 million purchase.
Ultimately, the group won $57.5 million after opting to receive a lump-sum payment for the jackpot instead of annuities.
The lawsuit argues that Grief and Lottery.com executives helped Rook TX manipulate the system to ensure the win. It accuses Grief and the website of repeatedly violating state and international law by printing and selling Texas Lottery tickets across state and international borders.
“My client believes this criminal activity went on to commit the felonious act of selling Texas Lottery tickets out of state hundreds of thousands of times.”
In the April 2023 incident, the lawsuit alleges that Rook TX didn’t pay the Texas Lottery for the tickets until after they had won the drawing.
“After the drawing, Lottery.com didn’t have a bank account that the Texas Lottery could sweep, so they sent them instructions on how to wire the money to the comptroller,” Nevells alleged. “This is a credit deal, more or less.”
The incident has also drawn increased scrutiny to the integrity of Texas Lottery games in general.
Lottery.com attempting to sell tickets overseas
Lottery.com was founded in 2015 and eventually set up shop in Austin.
The company was a lottery courier service that operated in over a dozen US states, including Texas. Though Texas doesn’t have an online lottery, the courier sold retail tickets through online means.
Sternberg alleges in the lawsuit that Lottery.com founder Ryan Dickerson had 142 winning Texas Lottery tickets over the course of three years, including back-to-back $50,000 Powerball wins in 2020 and 2021.
In 2022, prior to the Rook TX win, Lottery.com fired its co-founders, including Dickerson.
Earlier this month, Lottery.com announced its intentions to sell lottery tickets in Europe and Africa through its business-to-business sales platform. The Lottery.com website only advertises Texas Lottery tickets on the homepage, with “Available Soon” across the top corner.
Grief’s past highlighted in Sunset Advisory Commission Report
Current Texas Lottery leaders appeared before the Senate Finance Committee last week and continued to face scrutiny over their management and lack of action. Lawmakers were motivated by the most recent Sunset Advisory Commission (SCA) report that detailed the TLC’s history with failure to reign in couriers.
Much of the report pointed the finger at Grief, who was executive director of the TLC for 14 years before retiring in February of 2024.
The SCA noted that Grief was comfortable operating in gray areas of the State Lottery Act, as couriers were helping bring record lottery sales to the state.
During last week’s hearing, some lawmakers pushed for further investigation in Grief’s past dealings.
Grief’s attorney, Sam Bassett, released the following statement to KVUE:
“Gary Grief served the Texas Lottery Commission as Executive Director for approximately 15 years. He is proud of what he and his dedicated staff accomplished during those years. Gary adamantly denies being part of any dishonest, fraudulent or illegal scheme during his tenure and looks forward to cooperating in any official inquiry addressing the allegations being made.”
SCA suggests regulation or ban of couriers
The SCA report advised on ways the TLC could either ban or regulate courier operations in the state.
In the past, current executive director Ryan Mindell has sought guidance from lawmakers on how to best approach, and the SCA report now provides that.
Mindell has taken steps to help improve the integrity of the state lottery. He had ID scanners added to all lottery vending machines in the state. He also has limited the speed at which lottery machines can print tickets in order to avoid massive bulk purchases like what happened with Rook TX.
The SCA laid out a comprehensive plan for regulating couriers. Last week, the TLC responded with a 10-page letter to the Attorney General regarding potential regulation. There is likely to be some interplay between these discussions and the arguments being made in court regarding Nettles’ suit.
