Are Unauthorized Lottery Resellers Outlaws? Depends on Who You Ask

A number of companies offer customers the opportunity to purchase tickets for various U.S. state lotteries online, even customers who don't live in the state where the lottery is located. The operators of these services visit officially licensed state lottery vendors to purchase tickets for their customers who cannot do it themselves. Federal and state lottery officials declare these services illegal, but the companies say otherwise.

One site, eSuperLOTTO.com, attracted attention in March 2002 when it produced a press release stating that it had exclusive partnerships with may lottery outlets in California so that it could purchase tickets for customers who place orders online. The press release was issued one month after the California Lottery announced a warning that Internet sales of California lottery tickets were illegal. At the time, the lottery's director, Joan Wilson, said, "We want our customers to understand that legal tickets are available at our authorized locations only and that any Internet or out-of-state sites are simply not legal."

When the California Lottery discovered the eSuperLOTTO.com's press release, it turned the matter over to it legal department to investigate the matter.

Two years later, eSuperLOTTO.com is still operating, as are many other sites that provide similar services. Lottery Universe (www.lotteryuniverse.com) sells tickets for the Florida Lotto, California's Super Lotto and two other multi-state games. Interlotto (www.interlotto.com) sells tickets for 18 lotteries, most of which are international, such as the U.K. Lottery, the Australian Lotto and Euro Millions.

A federal U.S. law passed in 1995 makes it illegal for one individual to transfer lottery tickets across state lines for another individual. In most states, only authorized retailers can legally sell lottery tickets.

But the standard defense for the reseller is that the tickets never actually leave the state. Lottery Universe, for example, scans all the tickets it buys and then posts the images on the Internet for its customers to see. The site also claims that they don't sell lottery tickets. They instead act as a service that enables customers to purchase tickets from authorized agents. Any player who wins a large sum has to travel to the state of purchase to pick up the ticket and claim his winnings.

State officials are quick to denigrate such sites, but they seem reluctant to pursue legal action against them. Gaming law expert I. Nelson Rose told PC World that "as a practical matter, gambling crimes are low priority. Selling lottery tickets over the Internet isn't like selling heroin."

The Texas State Lottery Commission reported to the Harris County district attorney's office last year that Avatar, the company that runs Lottery Universe, is violating the Texas State Lottery Act by selling tickets at a rate above face value. The district attorney says it is still investigating the case and has yet to determine whether Avatar is breaking the law.

And according to Ken Hart, an attorney for the Florida Lottery Commission, "Lottery ticket brokers aren't in violation of Florida laws." In 1992, the state lost a case against Monticello Communications, a company that marketed Florida lottery tickets outside the state. Florida hasn't brought charges against any Internet lottery sites since then.

Such sites are common outside the United States as well. U.K.-based PlayEuroMillions.com, for example, offers a chance to play the Euro Millions lotter to consumers residing outside the participating countries.

Lottery resellers offer some people, particularly those in jurisdictions without lotteries, their only chance to participate in an activity that millions across the world enjoy. For others, they offer a chance to seize a monstrous payload. For example, if no one wins California's lottery for several consecutive weeks, the jackpot could rise to several hundred million. Lottery Universe and eSuperLOTTO give everyone a chance to hit the massive prize.

Nevertheless, the legitimacy of the groups, in the minds of many, is suspect. With no licenses and no regulators to monitor their activities, there is no guarantee a reseller is actually buying tickets. The customer has to rely on faith and trust that the reseller will turn a winning ticket over if it were ever to possess one.