AUSTIN (KXAN) — A Texas lottery player has filed a lawsuit alleging his May 2023 Lotto Texas jackpot prize was severely diminished by $95 million because a group of lottery retailers and a London-based sports gambling company conspired to rig a lottery drawing less than a month before his win.
On May 17, 2023, Jerry B. Reed of Hood County, Texas, won the Lotto Texas jackpot, which was worth $7.5 million.
However, Reed argued in the lawsuit that the jackpot could have been worth $95 million more, had an entity known as Rook TX not purchased a a winning Lotto Texas jackpot ticket worth $95 million in April 2023.
That April win has already drawn criticism from Texas lottery players and state lawmakers who have called the event a money laundering scheme.
Reed is seeking “recovery of funds fraudulently and illegally obtained” by the defendants in the case.
A ‘game rigging scheme’
The lawsuit alleges four lottery retailers, Lottery.com, Lottery Now, Inc., ALTX Management, LLC, and Qawi and Quddus, Inc., worked with a sports gambling company, Colossus Bets, to orchestrate a bulk purchasing event where they bought more than $25 million worth of lottery tickets that covered nearly all possible number combinations to almost guarantee a jackpot win.
The suit claims Colossus Bets and Lottery.com — and its founders, Ryan Dickinson, Tony DiMatteo, and Matthew Clemenson — enlisted help from the other three retailers named in the suit to pull off the bulk purchasing scheme. To print nearly every possible combination of numbers, the retailers had to print 2.58 million tickets with 10 number combinations in less than 72 hours, according to the suit.
Reed’s lawsuit claims the legal avenues for purchasing a lottery ticket are far too slow to print that many tickets in that amount of time. The suit claims the retailers “used custom-designed software, loaded onto smartphones, to generate a system of counterfeit QR codes that tricked the state-approved Texas Lottery terminals into recognizing the codes as if they had been generated by the Texas Lottery Commission’s authorized mobile app.”
Nexstar’s KXAN reached out to owners and officials of the mentioned retailers — as they were listed on each retailer’s lottery license application with the Texas Lottery Commission — for comment on this lawsuit. We are waiting for a response.
To win the Lotto Texas jackpot, a player has to match all six numbers on their ticket. Tickets with 3, 4, and 5 correct numbers also win a prize. In the case of the April 2023 drawing, those prizes ranged between $3 and $2,015 each. Rook TX, the entity that claimed the winning jackpot ticket, was able to purchase 394,574 tickets with some type of winning combination totaling $60,264,030 of prize winnings.
Claiming the winning ticket
The lawsuit alleges Colossus Bets formed the Rook GP LLC and Rook TX LP “as vehicles to hide the identity of the company and individuals who received the proceeds of the illegal game-rigging scheme.” According to the state of Delaware’s database, where both entities were formed, Rook GP LLC and Rook TX LP were incorporated on June 14 and 15, 2023, respectively.
The lawsuit then says a New Jersey-based attorney, Glenn Gelband, traveled to Texas to present the winning ticket to Texas Lottery authorities on behalf of Rook TX. The suit alleges Gelband falsely represented the entity was created on March 1 of that year on the Texas Lottery Winner Claim Form. The lawsuit claims the defendants broke Texas law by “intentionally or knowingly claiming a lottery prize or share of a prize by means of fraud, deceit, or misrepresentation.”
Nexstar was able to reach Gelband on the phone, but he said he was unable to speak because of a meeting. He said he would be free to talk later in the week. We will update our story with any new information.
What’s the future of the Texas lottery?
This lawsuit is another chapter in the saga involving the Texas Lottery Commission. Texas Gov. Greg Abbott has already directed the Texas Rangers to investigate the April 2023 win and a more recent lottery win in February. In that February win, a Texas woman won $83.5 million after purchasing $20 worth of tickets through a lottery courier service, which allows people to buy lottery tickets and scratch-offs through an app.
The Texas Lottery Commission told that woman and her attorney she may not receive any of those winnings as the Rangers investigate. The Commission has also announced lottery courier services are illegal in the state of Texas after facing mounting criticism from lawmakers. A proposed rule change would revoke the license of any retailer that works with a courier service.
The commission is up for Sunset review this year, meaning state lawmakers have to decide if they will continue the lottery or end it completely. Lt. Gov. Dan Patrick said in a news conference last week lawmakers will most likely have to make a decision on the future of the lottery before the Rangers finish their investigation.
“We can not renew the Lottery Commission if we can’t trust it,” Patrick said. “If we can’t look at people in the eye and say to Texas, ‘You can trust the Lottery, it’s not corrupt, and you’re going to get a fair deal and the games are fair.’ If we can’t do that then we can’t extend it.”
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