Before awarding a decade-long contract for a service that might not last beyond 2029, TDLR should wait on the State Legislature
AUSTIN, Texas (Texas Insider Report) — Millions of Texans buy Lottery Tickets each year, hoping fortune might favor them just once. But this year's biggest prize won't be sold at any gas station — and no player can buy a ticket. Three companies, none based in Texas, are waiting to hear which one of them will walk away with roughly $1.5 billion to run the Texas Lottery for the next decade. The state will name the winner by Nov. 2nd, the day before the election. Texans should ask questions about oversight, safeguards, and value:
- What oversight will they have over non-Texans?
- What safeguards will be in place?
- Are we getting the best deal?
If a school district wants to spend $100,000 on anything, not just lottery funds, it must publish a legal notice once a week for two weeks and generally jump through several compliance hoops. The agency that runs the lottery — the Texas Department of Licensing & Regulation (TDLR) — gave potential vendors just 20 days to notify it of interest and 90 days to finalize a bid for a contract expected to exceed $1.5 billion.Many Texas lawmakers would shutter the lottery today; the Texas House nearly did so last year after the now-defunct Texas Lottery Commission and the incumbent provider allowed a foreign gambling syndicate to buy every possible ticket, guaranteeing itself a profitable jackpot. Part of the legislative negotiations to keep the lottery open involved shuttering the commission and moving governance to TDLR.
Legislators expected better oversight; instead, they got a truncated process that favors an incumbent who's run the lottery since its inception and whose continued involvement may prompt lawmakers to kill the lottery when it comes up for sunset review in 2029.
Regardless, as long as there are drawings and scratchers to buy, someone has to run the operation, and Texans need to know whether our government got the best deal.
Regardless, as long as there are drawings and scratchers to buy, someone has to run the operation, and Texans need to know whether our government got the best deal.
It matters because of two cents (2¢), and I don't mean my opinion. Two pennies of every dollar spent on a ticket go to the outside operator. On $7.9 billion in annual sales, two cents (2¢) is $157 million a year — a penny here, a penny there.
Sooner or later, you're talking about real money.
In 2010, three companies spent five months bidding on the current contract, and the rate dropped: every hundredth of a percentage point is worth about $790,000 a year to Texans.
In 2024, 14 years and one six-year extension later, the old Lottery Commission finally posted a new bidding process, put everything on its website, gave bidders 128 days, and four operators showed up for the first meeting.
The Commission never completed that process because the Legislature abolished it. Its new state overseer reposted it earlier this year.
In 2024, 14 years and one six-year extension later, the old Lottery Commission finally posted a new bidding process, put everything on its website, gave bidders 128 days, and four operators showed up for the first meeting.
The Commission never completed that process because the Legislature abolished it. Its new state overseer reposted it earlier this year.
The notice appeared on the Comptroller's electronic bulletin board in February, even though the Lottery had posted a banal accounting contract on its own site just eight days earlier.
Potential operator companies had 20 days to file a letter of intent, "no exceptions," and 90 days to bid a 20-month takeover of one of the largest lotteries in the country.
The last time Texas bid this job, it allowed 128 days; the time before that, 144. Between the state's final answers to bidders' questions and the deadline, there were 17 days this time.
Three companies came to the one pre-bid meeting. The incumbent, which has run the system since the first ticket was sold in 1992, sent nine people. The two challengers sent two apiece.
All were involved in the 2024 bid.
Three companies came to the one pre-bid meeting. The incumbent, which has run the system since the first ticket was sold in 1992, sent nine people. The two challengers sent two apiece.
All were involved in the 2024 bid.
The agency told the Legislative Budget Board that the procurement was running "approximately five months ahead of schedule." That's one way to put it.
The Legislature gave the lottery until 2029 to prove it deserves to continue and told the agency to deliver its recommendations by Dec. 1. The agency plans to sign a contract that runs through 2038 in the weeks between the election and the session: a month before it tells lawmakers what the lottery should look like, and 10 weeks before they can do anything about it.
Before awarding another decade-long contract for a service that might not last beyond 2029, TDLR should wait until the Legislature convenes in January. It should then post the contract widely and make it available for public inspection. If the agency does not wait, legislators should refuse to fund it.
The new contract won't pay until September 2028, which falls within a budget the next Legislature writes. A simple rider that refuses to fund the contract costs the state nothing. That is the safest course.
State Sen. Charles Perry said as much at a hearing in September: "There's probably other people that can do this job." He's right, and legislators should still find them.
For TDLR, waiting is not failure; it is what every homeowner does when all the bids come in over budget. It should wait because every cent (2¢) matters.
Francisco “Quico” Canseco is a San Antonio attorney who represented Texas’ 23rd Congressional District for a single term after winning the seat in November 2010.
