Dawn Nettles of Garland, the top Texas lottery citizen watchdog, suggested two years ago that I visit the Colleyville store where a winning $95 million Lotto Texas prize was sold. She said something was fishy.
Fishy isn’t a strong enough word. A whale of a story is more like it. It turned out to be the leading location of what one state Senate leader later called “the largest fraud in state history.”
A newspaper editor once taught me that big stories don’t break. They ooze slowly, and that’s what happened here.
Such is the story of the store in a small strip center that had no lottery signage. Yet somehow, the store sold $11 million in $1 tickets in only 72 hours before the big drawing.
Three other participants in the scheme bought another $14 million in tickets at other locations. The syndicate bought every numeric possibility it could, locking out individual Texas buyers.
How is that possible? Lottery rules were broken. Instead of over-the-counter, in-person sales, as state law requires, a total of $25 million in tickets were sold through middlemen acting on behalf of out-of-state buyers. The sales were handled using computers, iPads and apps. Again, not permitted.
The winning ticket came from that pool of $25 million put up by an out-of-state syndicate. Texas buyers hardly stood a chance. The third-biggest jackpot in state history was rigged.
And with that, Nettles’ consistent criticism of the state lottery system going back 30 years was finally proven true.
The citizen gadfly was vindicated.
False front
State law requires that lottery tickets be sold in a retail store where other products are sold.
At the Collleyville location, the outdoor signage stated, “Hooked on MT” and inside were Montana fishing promo products like koozies and T-shirts.
It was a false front.
Winning lottery numbers
Nettles, 74, is the editor of LottoReport.com, which started out as a tout sheet 30 years ago that you could buy at a convenience store.
Eventually, she moved her operation online. And ultimately as she discovered more and more problems, her site morphed into an investigative website exposing the lottery’s wrongdoings.
She still posts winning numbers on her website within seconds of their draw, and she is the first in the state to release the numbers, even before the state makes the official announcement.
For this, she must always be home for the 10 p.m. drawings. In all this time, she only missed two results, both on Christmas Eve. Otherwise, you can count on her dedication. She spends three hours every night after drawings compiling information in spreadsheets and posting on her website.
Lottery deceptions
Nettles has helped The Watchdog tell stories that show the unfair ways the lottery treats its players.
There was the Willy Wonka game that promised a billion-dollar winner. The closest I could find for a big Texas winner was a Midland woman who won $42,500. Nobody won a billion dollars.
Another time, Nettles showed me how tickets for one scratch-off game were printed incorrectly, leaving many players to think they lost when they didn’t. Winning tickets could be found scattered on the floor or in trash cans. The lottery pulled the game after three months.
And she helped me understand why the emergence of the nation’s first $100 lottery ticket did more harm than good. That’s a ridiculous amount of money to lose.
Strangest interview
Inside the unmarked Colleyville lottery store a few days after the winning ticket was sold, I met Kevin Kramer, chief executive of Lottery Now, the parent company that operated the lottery website Mido Lotto.
He also owns the Montana fishing promotional outlet that shared space with the mysterious unmarked store.
What followed was one of the strangest interviews. I guess I didn’t ask the right questions because he danced around my queries.
He never confessed to selling $11 million worth of $1 tickets in a three-day spree. He never disclosed his role in the buying syndicate. And his explanation of the fishing angle was confusing.
Did someone walk in with $11 million and walk out with 11 million tickets? He wouldn’t say. He offered to sell me a lottery ticket. But I declined.
“Most of our sales came through our store to a customer who found us,” he told me. “For anyone looking to purchase large volumes of tickets, we are one of several retailers.”
He added that the more money raised, the more lottery money could benefit schools and veterans.
$57 million payout
Nobody knew that the lottery caper would be among the top issues in the 2025 Texas Legislature. Lt. Gov. Dan Patrick pushed the issue to the forefront by visiting an Austin lottery store and making a video. Sen. Paul Bettencourt, R-Houston, accused the lottery of helping money launderers. The Senate, afterward, approved a lottery reform bill. The House approved.
The story was pushed along by Houston Chronicle reporter Eric Dexheimer, who disclosed that a London betting house and a syndicate based out of Malta were the likely winners. John C. Moritz of the Austin American-Statesman kept the story alive, too.
The lottery remains in disarray. The last two executive directors — Gary Grief and Ryan Mindell — resigned in disgrace.
This scandal set back the movement to bring casino gambling to Texas.
State Sen. Carol Alvarado, D-Houston, said at a public hearing, “Boy, y’all are sure muddying the waters for some of us who try to expand gaming in this state.”
If you can’t handle the proper and legal sale of a $1 lottery ticket, how can you regulate gambling?
Under the new reform law, if Gov. Abbott signs it, the lottery commission is disbanded, and all lottery functions move to the Texas Department of Licensing and Regulation.
Out-of-state buyers will be blocked, the middlemen (called couriers) will be kicked out of Texas and phone, computer and internet apps will cease to function both in and out of Texas.
The lottery sent $57 million after taxes to the listed buyer — an East Coast company ed under the name Rook TX. One of the definitions of rook is a verb meaning to cheat or swindle.
That name is a brazen choice.
‘Super happy’
As for Nettles, she has been ed by five different documentary filmmakers who want to tell her story. One of them, Max Heckman of New York, told me the story is compelling.
“It really is a global story,” he said. “There’s a lot of really good characters. Dawn is larger than life.”
Nettles says she is “super happy” that the ineffective lottery commission is disbanded.
I checked with friends in Colleyville who had no idea that the empty storefront at 5200 Colleyville Boulevard is a landmark of sorts.
Last month, the outdoor fishing sign was removed, and the store is vacant.
The Texas Rangers are investigating.
Dawn Nettles, after all these years, is vindicated.
FROM THE ARCHIVES: Here are all Watchdog stories on the lottery.
