The Texas Lottery and billions in school funding in limbo as deadline nears at Capitol
Yahoo is using AI to generate takeaways from this article. This means the info may not always match what's in the article. Reporting mistakes helps us improve the experience.
Yahoo is using AI to generate takeaways from this article. This means the info may not always match what's in the article. Reporting mistakes helps us improve the experience.
Yahoo is using AI to generate takeaways from this article. This means the info may not always match what's in the article. Reporting mistakes helps us improve the experience. Generate Key Takeaways
State Sen. Bob Hall laid out a bill in a Senate State Affairs Committee hearing on Monday with one purpose: ending the Texas Lottery.
In a lengthy speech, the Edgewood Republican summarized all the problems at the Texas Lottery Commission that culminated in the agency allowing ticket sales he called illegal to occur. The only solution, Hall said, would be to abolish the game entirely.
'It's definitely the nuclear option, but what you have described is incredibly disturbing,' Sen. Angela Paxton, R-McKinney, said to Hall during the hearing.
With less than 30 days left in the session, lawmakers must pass legislation to either continue or end the lottery. At stake is $2 billion in public school funding and millions of dollars to veterans' programs it provides yearly.
Passing Senate Bill 1988 is not the only way the lottery could ultimately be abolished. Lawmakers must act on two key pieces of legislation to keep the lottery going past Sept. 1. First, lawmakers must return the lottery commission's funding in the next biennial state budget proposal after a House amendment removed it entirely. Second, the Legislature must pass one of two 'sunset' bills in each chamber. The lottery commission is under review by the Texas Sunset Advisory Commission, a legislative body that reviews state agencies every 12 years. The agency automatically closes if lawmakers do not renew it.
Neither of the two sunset bills — House Bill 1505 and Senate Bill 2402 — have been heard by their assigned committees. SB 1988 was also left pending in committee.
Much of the criticism of the Texas Lottery from Hall and others can be traced to lottery couriers, services that sell lottery tickets online. Couriers allow customers to play the lottery digitally by printing physical tickets at a licensed retail store their company owns and sending scanned photos of tickets to customers.
Hall and others have said rules the lottery commission approved over the years allowed couriers to operate in Texas contrary to state law and enabled illegal sales, including to minors and out-of-state customers.
'If the lottery commission were to adopt an official motto today, it would have to include unique words like lie, cheat, steal, mislead and cover-up,' Hall said during the hearing on SB 1988. 'This bill is intended to send a strong message to not just the lottery commission, but to all state agencies that have assumed authority not given to them by the Legislature.'
A $2 billion gamble
While most of the lottery's revenue goes to prize payouts, a little under 24% of the lottery's $8 billion in annual sales goes to Texas public schools, according to the lottery commission. That funding supplants, but does not supplement, schools' budget, said Chandra Villanueva, director of policy and advocacy for progressive nonprofit Every Texan.
The state budget for schools comes from several different funds, including the lottery. That means the game's abolition would not immediately decrease actual money schools receive, but it would create a gap in the state's budget.
'If we got rid of the lottery, it wouldn't impact schools at all, just like how if we go out and buy a bunch of lottery tickets today, it wouldn't create more funding for schools,' Villanueva said. 'It's formula driven, and the state would just have to make it up through general revenue.'
A committee made up of members of the House and Senate will meet to hash out the final details of the budget. If the lottery is not going to provide the $2 billion, the committee must make up the shortfall. The harm to schools might still come, Villanueva said, depending on where lawmakers choose to pull the money from.
House Bill 2, a school funding increase that passed out of the House in April, seeks to add $8 billion to public education by giving raises to teachers, increasing school districts' money per student and more. The House bill is awaiting Senate action, and Villanueva said some of the proposals in the bill could get cut to make up for a potential absence of lottery money.
'Unfortunately, because they've been so hesitant around funding public education, it would probably come out of any dollars that are set aside for formula increases that we're seeing in HB 2,' Villanueva said.
For Hall, the price of removing the corruption of the lottery commission is worth the trouble of finding money elsewhere in the budget to cover the losses.
'We keep billions of dollars around here like you or I would spend nickels and dimes, so it's not that significant,' Hall said.
That $2 billion to schools, while valuable, represents only a small fraction of public education funding in the state — about three days' worth of education, Hall said. Although opponents of the lottery like Lt. Gov. Dan Patrick have been vocal, supporters have been less forthcoming. Hall said he's heard from some fellow legislators who are concerned about the funding gaps, but not vehemently so.
'I don't find anybody anxious to defend the lottery and jump up for it,' Hall said in a recent interview with The Texas Tribune.
Supporters of the lottery's continuation, like Rep. Josey Garcia, said ongoing support for the game won't come without scrutiny. The San Antonio representative was one of a few Democrats in the House with amendments to the budget that would have pulled money away from the lottery to other programs, but said she values what the game offers Texans.
'If we know that there's potential mishandling, then there needs to be a full review and you need to rehire, because that one thing that we can't accept from our government is the mishandling of any resources,' Garcia said.
Despite her initial eyeing of the lottery's funding for other purposes, Garcia said she still believes the game can be an honest source of revenue for the state.The lottery also provides roughly $26 million a year to the Texas Veterans Commission Fund for Veterans' Assistance, which provides grants for veteran services. Garcia, who is a veteran, said the programs the lottery supports for veterans deserves the same level of care she had while serving.
Almost all of the lottery commission's funding comes from ticket revenue, which is stored in a separate account. If the sunset bills are not passed, the funds in the account — roughly $430 million, according to the Texas Comptroller's office — would be placed back in the state's general revenue in 2026.
'I was a logistician, and we had to account for our budget to the penny, and I just can't imagine that we wouldn't do the same for these programs,' Garcia said.
Standoff on courier regulations
Two major jackpot wins are at the heart of concerns involving couriers and lawmakers' scrutiny of the services' unclear ability to operate under state law. In April 2023, a $95 million jackpot was won after four retailers, some of whom were partnered with couriers, printed 99% of the 25.8 million possible ticket combinations. Those orders weren't taken over the phone, but ticket-printing terminals were requested from the lottery commission by a lottery courier, Lottery.com, to complete the 'bulk purchase.'
Another $83.5 million jackpot was won by an anonymous woman who bought the winning ticket in February on an app operated by the courier Jackpocket. Currently, state law prohibits selling lottery tickets by 'telephone,' which some lawmakers, including Hall and Patrick, have said should apply to couriers' website and app sales., Courier executives have said the law only applies to phone call orders.
Both of those jackpots have prompted state investigations from Attorney General Ken Paxton's office and the Texas Rangers, a division of the Department of Public Safety.
Couriers have operated in the state for years as lottery commission officials claimed they could not regulate the services. That changed in February, when the lottery commission abruptly announced in late April it would ban couriers from operating.
One courier, Lotto.com, sued the commission over the rule and was granted a temporary restraining order by a Travis County district judge on Friday. In granting the restraining order, which allows Lotto.com to continue operating in Texas, the judge wrote there was 'substantial likelihood' that Lotto.com's claims would prevail in the suit.
Patrick named banning couriers from operating as one of his legislative priorities, and a bill being heard in the House on Tuesday seeks to go further than the lottery commission's restrictions. Senate Bill 28, authored by Hall, would explicitly block online sales and criminalize lottery couriers, creating a misdemeanor for purchasing and selling the tickets online.
Another bill being heard during the same hearing does just the opposite: House Bill 3201 would allow lottery couriers to be licensed by the state to sell tickets online, but only after going through background checks and creating guardrails to prevent illegal purchases. Authored by Rep. John Bucy III, D-Austin, the bill also would require that couriers submit to yearly financial audits reviewing their sales.
In a statement to the Tribune after the lottery commission passed its courier ban, Bucy said the agency is overstepping by choosing to ban the services while legislators are discussing how they want to act on couriers.
'It's outrageous that the Texas Lottery Commission — an unelected body — would take sweeping action like this in the middle of the legislative session, especially after claiming for years they had no authority to regulate these services,' Bucy said.
Disclosure: Every Texan and Texas Veterans Commission have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.
Tickets are on sale now for the 15th annual Texas Tribune Festival, Texas' breakout ideas and politics event happening Nov. 13–15 in downtown Austin. TribFest 2025 is presented by JPMorganChase.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Politico
27 minutes ago
- Politico
Graham wants to punish Russia with ‘bone-crushing' sanctions. It could backfire.
Sen. Lindsey Graham has pledged that his expansive sanctions bill would be 'bone crushing' for the Russian economy. But if enacted, the South Carolina Republican's proposal to impose 500 percent tariffs on any country that buys Russian energy would effectively cut the U.S. off from some of the world's largest economies — including allies in Europe. 'A 500 percent tariff is essentially a hard decoupling,' said Kevin Book, managing director of Clear View Energy Partners, an energy research firm. Graham appeared to acknowledge as much on Wednesday, when he proposed a broad carve-out for countries that provide aid to Ukraine. This exemption would spare the European Union, which continues to import almost 20 percent of its gas from Russia. But experts remain skeptical that the sky-high tariffs proposed in the Sanctioning Russia Act are in any way feasible. India and China buy roughly 70 percent of Russian energy exports, but several other countries that buy any oil, gas or uranium from Moscow — and aren't included in the carve-out — could also be exposed to tariffs under the bill. The United States, which is still reliant on imports of enriched uranium from Russia to fuel its nuclear reactors, could also run afoul of the bill. Edward Fishman, a senior researcher with the Center on Global Energy Policy at Columbia University, said countries in the crosshairs of the bill would struggle to halt their imports of Russian energy overnight. Tariffs of 500 percent on imports of goods made in China would send prices soaring, disrupt supply chains and could drive up U.S. unemployment to recessionary levels. Most likely, it would lead to a screeching halt in U.S. trade with China. 'It would hurt Americans quite a bit,' Fishman said. The legislation's goal, co-sponsored by Sen. Richard Blumenthal (D-Conn.), is to starve Russia's war economy, which continues to earn hundreds of billions of dollars from energy exports. There is widespread support for the overall objective, with 82 senators signing on to Graham's bill so far, and growing support for a companion bill in the House. The bill is likely to change significantly as it moves through Congress and in consultations with the Trump administration, said Matt Zweig, senior policy director of FDD Action, a nonprofit advocacy organization affiliated with the Foundation for Defense of Democracies. It may also take a long time. 'With sanctions legislation, you're also normally dealing with iterative processes where you would want to go through every nook and cranny,' Zweig said. Still, the widespread bipartisan support for the legislation suggests there is a high degree of support among lawmakers for tougher action on Russia. 'What Congress may be doing is pressuring the executive branch to act,' said Adam Smith, a partner at the law firm Gibson Dunn. 'There is a sense in the Senate that more sanctions on Russia need to be imposed, or ought to be imposed,' added Smith, who was a senior adviser to the Treasury's Office of Foreign Assets Control during the Obama administration. Graham, the bill's most vocal Republican advocate, said as much in a meeting with reporters in Paris over the weekend, where he described the bill as 'one of the most draconian sanctions bills ever written.' 'The Senate is pissed that Russia is playing a game at our expense and the world's expense. And we are willing to do something we haven't been willing to do before — and that is go after people that have been helping Putin,' Graham said. Sen. Jeanne Shaheen of New Hampshire, the top Democrat on the Senate Foreign Relations Committee, dismissed concerns that the bill is too harsh. 'We need to make Putin understand he has to stop screwing around and come to the table. But we also need to follow it up and make clear we will be tough,' she said. Not everyone agrees. Sen. Rand Paul (R-Ky.), who has long been skeptical about the effectiveness of sanctions to change the behavior of U.S. adversaries, bashed the bill on Monday as 'literally the most ill-conceived bill I've ever seen in Washington,' he said. 'It would be a worldwide embargo on 36 countries.' Meanwhile, Russia and Ukraine have made little progress on peace talks. Officials from both countries met in Istanbul on Monday and agreed to a further prisoner swap, but failed to achieve any major breakthroughs. Graham and Blumenthal visited Ukraine, France and Germany during last week's congressional recess, where they discussed the sanctions bill, as well as efforts to push Russia to the negotiating table. The proposal has been welcomed by European Commission President Ursula Von der Leyen, who met with Graham in Berlin on Monday. 'Pressure works, as the Kremlin understands nothing else,' Von der Leyen said in a statement. 'These steps, taken together with U.S. measures, would sharply increase the joint impact of our sanctions.' Senate Majority Leader John Thune indicated Monday that the chamber could take up the legislation later this month. Republican senators have said they would like to secure the approval of the White House before moving forward. The proposed use of blanket tariffs to target countries that continue to do business with Russia's energy sector is novel and appears to be pitched to Trump's interests. On Tuesday, White House press secretary Karoline Leavitt said Trump viewed sanctions as 'a tool in his toolbox,' but declined to comment about his position on the bill. Trump appeared to be inching closer toward supporting the bill in a post on Truth Social on Wednesday, which linked to an op-ed in The Washington Post supporting the legislation. Speaking in the Oval Office on Thursday, Trump indicated he wanted lawmakers to secure his approval before moving forward with the bill. 'They're waiting for me to decide on what to do,' he said, describing the legislation as a 'harsh bill.' The president has liberally wielded tariffs to advance his foreign policy agenda, but his implementation has been spotty. Wall Street has even adopted a trading strategy referencing Trump's capriciousness called TACO, which stands for 'Trump Always Chickens Out.' Tariffs of 145 percent on China, imposed in April, lasted a month before being dramatically scaled back to make way for trade talks, which have so far failed to secure a breakthrough. As it stands, the bill includes some levers that Trump could pull to forestall the tariffs, requiring the president to make a formal determination that Russia is refusing to negotiate or has violated any future peace agreement. Nahal Toosi, Joshua Berlinger, Phelim Kine and Katherine Tully-McManus contributed to this report.
San Francisco Chronicle
an hour ago
- San Francisco Chronicle
A $2.8 billion settlement will change college sports forever. Here's how
A federal judge has approved terms of a sprawling $2.8 billion antitrust settlement that will upend the way college sports have been run for more than a century. In short, schools can now directly pay players through licensing deals — a concept that goes against the foundation of amateurism that college sports was built upon. Some questions and answers about this monumental change for college athletics: Q: What is the House settlement and why does it matter? A: Grant House is a former Arizona State swimmer who sued the defendants (the NCAA and the five biggest athletic conferences in the nation). His lawsuit and two others were combined and over several years the dispute wound up with the settlement that ends a decades-old prohibition on schools cutting checks directly to athletes. Now, each school will be able to make payments to athletes for use of their name, image and likeness (NIL). For reference, there are nearly 200,000 athletes and 350 schools in Division I alone and 500,000 and 1,100 schools across the entire NCAA. Q: How much will the schools pay the athletes and where will the money come from? A: In Year 1, each school can share up to about $20.5 million with their athletes, a number that represents 22% of their revenue from things like media rights, ticket sales and sponsorships. Alabama athletic director Greg Byrne famously told Congress 'those are resources and revenues that don't exist.' Some of the money will come via ever-growing TV rights packages, especially for the College Football Playoff. But some schools are increasing costs to fans through 'talent fees,' concession price hikes and 'athletic fees' added to tuition costs. Q: What about scholarships? Wasn't that like paying the athletes? A: Scholarships and 'cost of attendance' have always been part of the deal for many Division I athletes and there is certainly value to that, especially if athletes get their degree. The NCAA says its member schools hand out nearly $4 billion in athletic scholarships every year. But athletes have long argued that it was hardly enough to compensate them for the millions in revenue they helped produce for the schools, which went to a lot of places, including multimillion-dollar coaches' salaries. They took those arguments to court and won. Q: Haven't players been getting paid for a while now? A: Yes, since 2021. Facing losses in court and a growing number of state laws targeting its amateurism policies, the NCAA cleared the way for athletes to receive NIL money from third parties, including so-called donor-backed collectives that support various schools. Under House, the school can pay that money directly to athletes and the collectives are still in the game. Q: But will $20.5 million cover all the costs for the athletes? A: Probably not. But under terms of the settlement, third parties are still allowed to cut deals with the players. Some call it a workaround, but most simply view this as the new reality in college sports as schools battle to land top talent and then keep them on campus. Top quarterbacks are reportedly getting paid around $2 million a year, which would eat up about 10% of a typical school's NIL budget for all its athletes. Q: Are there any rules or is it a free-for-all? A: The defendant conferences (ACC, Big Ten, Big 12, SEC and Pac-12) are creating an enforcement arm that is essentially taking over for the NCAA, which used to police recruiting violations and the like. Among this new entity's biggest functions is to analyze third-party deals worth $600 or more to make sure they are paying players an appropriate 'market value' for the services being provided. The so-called College Sports Commission promises to be quicker and more efficient than the NCAA. Schools are being asked to sign a contract saying they will abide by the rules of this new structure, even if it means going against laws passed in their individual states. Q: What about players who played before NIL was allowed? A: A key component of the settlement is the $2.7 billion in back pay going to athletes who competed between 2016-24 and were either fully or partially shut out from those payments under previous NCAA rules. That money will come from the NCAA and its conferences (but really from the schools, who will receive lower-than-normal payouts from things like March Madness). Q: Who will get most of the money? A: Since football and men's basketball are the primary revenue drivers at most schools, and that money helps fund all the other sports, it stands to reason that the football and basketball players will get most of the money. But that is one of the most difficult calculations for the schools to make. There could be Title IX equity concerns as well. Q: What about all the swimmers, gymnasts and other Olympic sports athletes? A: The settlement calls for roster limits that will reduce the number of players on all teams while making all of those players – not just a portion – eligible for full scholarships. This figures to have an outsize impact on Olympic-sport athletes, whose scholarships cost as much as that of a football player but whose sports don't produce revenue. There are concerns that the pipeline of college talent for Team USA will take a hit. Q: So, once this is finished, all of college sports' problems are solved, right? A: The new enforcement arm seems ripe for litigation. There are also the issues of collective bargaining and whether athletes should flat-out be considered employees, a notion the NCAA and schools are generally not interested in, despite Tennessee athletic director Danny White's suggestion that collective bargaining is a potential solution to a lot of headaches. NCAA President Charlie Baker has been pushing Congress for a limited antitrust exemption that would protect college sports from another series of lawsuits but so far nothing has emerged from Capitol Hill.
an hour ago
Could Musk-Trump feud stoke GOP divisions ahead of midterms? ANALYSIS
Even by the standards of President Donald Trump and billionaire Elon Musk's relationship -- an unprecedented alliance punctuated by a meme-inspired reshaping of the government, numerous rocket launches, assassination attempts, a quarter-billion-dollar political gamble and electric car photo-ops -- it's been an unusual week. For months, Musk had been the closest of Trump's advisers -- even living at his Mar-a-Lago estate in Florida and spending time with the president's family. More recently, Trump gave Musk a congratulatory Oval Office sendoff from his work leading cost-cutting efforts in his administration, giving him a golden key with a White House insignia. But the billionaire's muted criticisms of Trump's "big, beautiful bill" grew louder and more pointed, culminating in posts Thursday on his social media platform taking credit for Trump's November win and Republicans' takeover of the Senate. "Without me, Trump would have lost the election, Dems would control the House and the Republicans would be 51-49 in the Senate," Musk posted. "Such ingratitude." Some lawmakers and Republicans worry Musk's apparent acrimonious departure from Trump's orbit could create new uncertainties for the party -- and stoke GOP divisions that would not serve Republicans well heading into a critical legislative stretch before the midterm elections. The back-and-forth attacks, which continued into the weekend and took a sharply personal turn, reverberated across a capital they have both reshaped. Trump on Friday told several reporters over the phone that he was not thinking about Musk and told ABC News Chief Washington Correspondent Jonathan Karl that Musk had "lost his mind." In the near term, Trump and the GOP are trying to muscle their signature tax and domestic policy megabill through the House and Senate, with the slimmest of margins and no shortage of disagreements. Any shift on the key issues could topple the high-wire act needed to please House and Senate Republicans. A nonstop torrent of criticism from Musk's social media megaphone could collapse negotiations, harden the position of the bill's critics and even undermine other pieces of Trump's first-term agenda. "You hate seeing division and chaos," Rep. Don Bacon, R-Neb., who represents a swing district, told ABC News about the Trump-Musk fracas. "It's not helpful." Rep. Jodey Arrington, R-Texas, the chairman of the House Budget Committee, called Musk a "credible voice" on "debt and spending" issues. "It's never helpful when he says those things. He's a believable person and he has a broad reach, but I think he's frustrated and people understand the context," Arrington said, predicting that both men will eventually resolve their dispute. Republican operatives watching the spat unfold this week told ABC News it is too early to say how the feud between Trump and Musk could affect the next election. The billionaire spent more than anyone else on the last election, pouring $270 million into groups boosting Trump and other Republicans up and down the ballot, according to Federal Election Commission filings. He already suggested he would cut back on his political donations next cycle, more than a year out from the midterm elections. In the final stretch of the 2024 race, he relocated to Pennsylvania, hosting town halls and bankrolling his own get-out-the-vote effort in the critical swing state. Since his foray into Washington, Musk has become a deeply polarizing and unpopular figure, while the president's approval rating has ticked up in some recent surveys. Groups affiliated with Musk spent $20 million this spring on the Wisconsin Supreme Court race, only for the liberal candidate to win -- signaling to some Republicans the limits of Musk's political pull. While his support may be missed by Republicans next cycle, Trump has continued to raise millions of dollars to support his future political plans, a remarkable sum for a term-limited president that underscores his central role in the party and undisputed kingmaker status. Rep. Mike Lawler, R-N.Y., who is mulling a gubernatorial bid in 2026, downplayed the tensions or political implications, suggesting that reporters "spend way more time worrying about these things than most average people." "I'm sure they will make peace," Lawler told ABC News on Friday. There were some signs of a détente. While Musk continued to hurl insults at Trump ally and critic Steve Bannon, his social media activity appeared to cool off on Friday, and the billionaire said one supporter was "not wrong" for saying Trump and Musk are "much stronger together than apart." Through nearly a decade in politics and three campaigns for the White House, Trump has demonstrated a remarkable ability to move past disputes or disagreements with many intraparty rivals and onetime critics, including some who now serve in his Cabinet. Now, some Republicans left Washington this week asking themselves if Musk is willing to do the same.
