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Mike Wells, director of the Oregon Lottery, admitted it has maintained a neutral stance on lottery courier services over the years, a position that has changed as more of the services operate in the state, with no formal regulatory oversight.

“This is in part because we only had very few couriers operating in Oregon and generally they followed industry norms,” Wells said. “We at the lottery really kept an arm’s length relationship with them. We communicated with our retailers and did not have communications with couriers.”

Wells explained that if something were wrong, he would discuss that issue with the lottery retailer directly and relied on the retailer to manage that relationship. Currently, there are about 3,200 lottery retailers in Oregon.

“That said, many in the broader lottery community … have long voiced concern over Oregon’s very permissive approach to couriers in the state,” Wells said. “More recently, the landscape has changed when it comes down to couriers. We have seen a rise in the number of couriers and in the expansion of the types of lottery products that couriers are selling.”

Wells added that the lottery had also “noticed a decline in the transparency of those courier services.”

In a revised regulatory proposal released earlier this month, lottery officials found that about seven retailers were working with courier services and six retailers worked with vendors on out-of-state and international tickets.

Wells discussed the rationale behind their efforts to regulate lottery couriers during an Oregon Lottery Commission meeting on Friday (July 25). The proposed rules would prohibit lottery retailers from working with courier services to offer out-of-state sales.

The Oregon Lottery is also proposing to ban bulk purchases of lottery tickets, as well as new requirements on retailers that contract with courier services to keep records of ticket purchases and store tickets securely for couriers.

Retailers would also be required to notify the lottery in writing of their relationship with lottery couriers, ensure age and location verification of customers, safeguard tickets held on behalf of customers, and secure the personal and financial information of players.

The retailer must also “agree to indemnify the lottery for damages that may result from the actions of the courier service.” The regulation of retailers that do business with courier services will be discussed once again at a commission meeting on August 29, according to the lottery.

The commission didn’t vote on the proposed regulations last week, but they will be back on the agenda at their September 26 meeting, according to rules coordinator Kris Skaro. The lottery will accept public comment on the proposed regulations until August 29. 

“Over the past year, we’ve received formal concerns from both national and international lottery partners, which has raised some very significant risks to some key relationships,” Wells said. “Relationships that are important to the financial stability of this organization.”

Wells did not specifically identify those who had expressed their concerns to him over the unregulated use of courier services in Oregon.

Among the agencies that have expressed concerns over the use of lottery courier services was the World Lottery Association (WLA), which in a position paper recommended a three-pronged approach to regulation.

“The WLA recognized that the use of courier services is a policy decision to be made by the competent authorities in each jurisdiction,” according to the international, member-based organization of state-authorized lotteries and suppliers.

However, if a decision is to “permit or tolerate these services,” the WLA recommends the activity be regulated either through legislative or lottery rules.

Those rules should also deal with ticket ordering, digital delivery, retention and redemption requirements. They also should identify the retailer they are doing business with, as well as ensuring tickets couriers undergo the same background checks as retailers.

The WLA also urges lottery courier services to use geolocation services to make sure an individual purchaser is located within a specific jurisdiction.

Lottery courier services are third-party companies that enable individuals to purchase lottery tickets online or through a mobile app. The process requires the courier company, such as Lotto.com or Jackpocket, to have an employee within the jurisdiction to make an in-person purchase.

The employee than scans and uploads the ticket or multiple tickets into the patron account, where it is held.

Wells acknowledged that they spent a significant period of time going through a deliberate process and consulting with the industry before publishing the proposed regulations.

“We definitely understand the economic implications for both retail and those retailers who are partnering with lottery courier services as well as we understand the impact to the state of Oregon.”

Wells noted that there is a revenue impact should these regulations be implemented. 

“It is something hard for any of us to stomach but something we know needs to be thought through, and very carefully thought through,” he added.

If international sales are discontinued by the end of 2025, lottery revenue for the business year 2026 is estimated at between $32.6m and $54.9m, with state transfers to the Economic Development Fund (EDF) deceasing by an estimated $11.1m to $18.7m annually, according to the state Office of Economic Analysis.

For context, the overall transfer to the EDF is forecasted to be close to $1.9bn for the 2025-2027 biennium.

“These changes reinforce our constitutional and statutory mandate to ensure fairness, integrity and security in all Oregon Lottery operators,” Wells told the five-member commission.