Are lottery courier services legal under state and federal law?

US Online Lottery Couriers Face A Complicated Legal Landscape

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Websites have recently been popping up allowing individuals to buy lottery tickets online in different states by utilizing third-party proxies to make purchases remotely.

Some such companies appear to hold the tickets in a vault, whereas others employ couriers to deliver physical ticket(s) to customers.

Obviously, the attractiveness of these services is that not every state’s lottery offerings are the same. And not every state even has a lottery program to begin with. In particular, players in jurisdictions without access to high-prize fixtures like Powerball and Mega Millions may feel like they are missing out.

There have been a few high-profile instances in recent years involving foreigners that won American lottery prizes without ever setting foot in the United States. These include a man in Iraq who won $6.4 million in 2015, and a Panama woman who won $30 million in 2017.

The obvious question, then, is whether or not these services are legal.

‘The Lottery Case’

The federal government has long concerned itself with the operation of state-run lotteries.

Congress notably passed the Anti-Lottery Act in 1890, banning the use of the Postal Service to distribute lottery-related mail. At the time, the Louisiana Lottery Company was the only legal US lottery in operation.

Lawmakers subsequently banned the act of sending lottery tickets across state lines, expanding the prohibition on local delivery via the USPS.

That 1895 law spawned one of the most important gambling law cases in the history of the country. Officially captioned Champion v. Ames at the time, it’s now known more commonly as just the Lottery Case.

The Lottery Case centered on Charles Champion, who was indicted for conspiring to send lottery tickets across state lines. The Supreme Court held in a 5-4 decision that lottery tickets were “subjects of traffic,” and could therefore be regulated by Congress under its commerce powers.

A legal tug of war

Beginning in 1964, states across the country began to reintroduce the once-vilified lottery as a means of replenishing state coffers. Only five states do not provide their citizens with access to a lottery today, and six states offer online sales in tandem with a retail product.

It was, in fact, a question about the interstate nature of online lottery sales that resulted in the Wire Act opinion which is now the subject of litigation in the First Circuit Court of Appeals.

In 2009, officials from New York and Illinois sought guidance on whether or not they could offer “virtual tickets electronically delivered over the Internet to computers or mobile phones” without offending the Wire Act.

The 2011 opinion from the Department of Justice did not delve far beyond addressing the actual scope of the Act.

Current federal law on lotteries

The original Wire Act memo does make reference to some federal laws that govern lotteries. The provisions exist within various sections found in Title 18 of the US Code.

Section 1301 appears to be most relevant here.

It creates a criminal offense for anyone who “carries in interstate or foreign commerce any paper, certificate, or instrument purporting to be or to represent a ticket, chance, share, or interest in or dependent upon the event of a lottery, gift enterprise, or similar scheme, offering prizes dependent in whole or in part upon lot or chance…”

The statute also states:

“[B]eing engaged in the business of procuring for a person in 1 State such a ticket, chance, share, or interest in a lottery, gift, enterprise or similar scheme conducted by another State (unless that business is permitted under an agreement between the States in question or appropriate authorities of those States), knowingly transmits in interstate or foreign commerce information to be used for the purpose of procuring such a ticket, chance, share, or interest; or knowingly takes or receives any such paper, certificate, instrument, advertisement, or list so brought, deposited, or transported, shall be fined under this title or imprisoned not more than two years, or both.”

That language seems to limit the ability of businesses to procure lottery tickets for individuals in other states unless such an act is expressly authorized.

The key factor in examining the permissibility of these lottery resellers likely rests (like most things gambling) with the local lawfulness of the business, which will vary between all 45 states with lotteries — and perhaps even those without.

It’s a matter of construction

Many of these lottery ticket purchasing businesses now exist, each with a distinct set of rules for patrons. Some may comply with all laws and regulations; some almost certainly do not.

One prominent provider, Jackpocket, describes its legality in six jurisdictions like this:

Jackpocket complies with all applicable state laws and regulations. The Jackpocket app allows users to order lottery tickets that are then fulfilled on their behalf at a licensed lottery retailer.

Think of Jackpocket like your really good friend who is always available to take your orders for lottery tickets and always makes sure to secure the exact ticket you requested in time for the drawing!

Just as ride-sharing services and private short-term rental companies (and even daily fantasy sports) materialized without legal clarity, the operation of lottery couriers exists in a gray area in some states.

Like those other gig-economy businesses, lottery resellers began to spring up with the advent of the internet. And it appears they caught at least some policymakers off guard. States will likely need to reexamine their laws and decide how to move forward as these companies continue to gain attention.

In the meantime, however, customers of at least some sites might not be protected if things go wrong. There is a reason that lottery retailers are regulated — to provide consumer protections — and resellers that subvert these protections do so without the imprimatur of state licensure.

- John Holden J.D. / Ph.D. is an academic. His research focuses on policy issues surrounding sports corruption.
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