A performance audit from the Colorado Lottery has brought scrutiny to courier services, which are third-party companies like Lotto.com and Jackpocket.
Among the main concerns found in the audit is the legality of couriers. Colorado law prohibits buying lottery tickets from an unauthorized or unlicensed retailer, and since couriers aren’t licensed retailers, they’re on shaky legal ground.
The Colorado Lottery performance audit stated:
“According to the Lottery, couriers are not selling lottery tickets; rather, they are taking an order for a lottery ticket from a player and then purchasing the ticket from their associated licensed retailer on the player’s behalf.
However, from the player’s perspective, they are ordering and paying for lottery tickets online through the courier’s website or app and players may assume that they are purchasing the tickets from the courier.”
Who are Colorado’s two lottery couriers?
When a customer buys a jackpot (Powerball, for example) ticket via Jackpocket, Jackpocket prints a physical ticket at licensed retailer Winners Corner, then scans the ticket and sends the scanned image to the customer. If a customer buys a scratch-off ticket, Jackpocket uses the customer’s money to buy a ticket from its retailer, Winners Corner and then ships the scratcher to the customer.
In both cases, the customer pays a fee on top of the ticket price.
Lotto.com’s process is more online-based than Jackpocket. When a customer pays Lotto.com for a jackpot ticket, Lotto.com purchases a ticket from its licensed retailer, Players Café.
Then, Lotto.com sends the customer his or her numbers without scanning the ticket. For scratchers, Lotto.com buys the tickets from its licensed retailer and lets the customer “scratch” the ticket online.
Customers pay Lotto.com a small fee for each ticket they buy.
What’s the issue with Colorado couriers?
The audit’s main concern about couriers is that customers believe they’re buying a ticket from Jackpocket and Lotto.com. In reality, the two companies are taking customers’ money and buying tickets on their behalf from their licensed retailers.
That’s completely legal, according to Colorado law.
The optics are what’s concerning, the audit noted. Jackpocket and Lotto.com own the licensed lottery retailers from which they work. But Jackpocket and Lotto.com are separate entities and the Colorado Lottery does not regulate them.
Customers likely don’t know the difference. And they end up thinking that Jackpocket and Lotto.com have a license to sell the lottery at retail.
“Given the relationships between the couriers and their associated licensed retailers, the line between the two may not be clearly distinguished,” the audit noted.
Consumer protection is at stake
Because customers might think that Jackpocket and Lotto.com are licensed retailers, they may buy tickets thinking they have the protection of Colorado Lottery regulations. However, they don’t.
The audit pointed out that, while Jackpocket and Lotto.com’s licensed retailers are regulated by the state lottery, the companies themselves are not. The audit said:
“Licensing retailers who sell to couriers may not be consistent with the framework set up in statute for selling lottery tickets and does not allow for the Lottery to have sufficient oversight of couriers. While the letter of the law might be followed under this courier sales model, it may not be in the spirit under which the laws were created.”
What’s ahead for Jackpocket and Lotto.com
The audit called for the state’s lottery regulatory groups (Colorado Lottery and the Lottery Commissions) to examine current regulations and suggest changes that adapt to the lottery framework.
If regulators deem changes are necessary, the Colorado Lottery will submit the changes to the state’s lottery commission and/or the state legislature.