Is the Texas Lottery's Triple Chance game with a preset prize legal?

Plain-English summary

State Senator Robert Deuell, chair of the Senate Committee on Economic Development, asked the Attorney General whether a new game from the Texas Lottery Commission, called Texas Triple Chance, violated the Texas Constitution. His concern was that the game used a "preset" prize amount and that, if no one hit the jackpot, the Lottery would simply keep that prize money rather than rolling it over to a future drawing.

The AG started with the constitutional basis for the lottery. Article III, subsection 47(e) lets the Legislature authorize the State to run lotteries, and the Legislature did so by passing the State Lottery Act (chapter 466 of the Government Code). That Act gives the Commission broad authority to write rules about the kinds of lottery games it offers. The Commission used that authority to adopt a rule (16 Texas Administrative Code section 401.322) laying out how Texas Triple Chance works: for each $2 play the player gets three sets of seven numbers (three "Chances"), drawn from a field of 55, with a top prize of $100,000 for matching all seven in a single chance and smaller prizes for fewer matches.

The AG then asked whether the game is actually a "lottery." The Constitution does not define the word, but both the Act and the Texas Supreme Court describe a lottery by three elements: a prize is offered, the prize is awarded by chance, and the player gives something of value for the opportunity to win. Texas Triple Chance has all three. It offers cash prizes, the winners are decided by a random drawing, and each play costs $2. So the game qualified as a lottery.

On Senator Deuell's specific worries, the AG found nothing in the Constitution or the Act that forbids a preset prize amount that does not change with ticket sales, and nothing that requires the Commission to carry unclaimed jackpot money forward to a later winner. When a statute leaves room for policy choices, courts normally defer to the agency's reading unless it is plainly wrong or inconsistent with the law. The AG noted the Commission already ran other games with preset prizes and the possibility of no jackpot winner. Because the Legislature gave the Commission discretion over how prizes are structured, the AG concluded a court would be unlikely to strike down Texas Triple Chance just because of its preset prize or its treatment of unclaimed jackpot money.

Currency note

This opinion was issued in 2014. Subsequent statutory amendments, court decisions, or later Attorney General opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

What the opinion meant for those who asked

Senator Deuell and the Senate Committee on Economic Development (as the opinion described it): The opinion concluded that a court would be unlikely to find Texas Triple Chance unconstitutional merely because it awarded a preset prize amount regardless of ticket sales or because it did not carry forward unclaimed jackpot money. It treated those design features as policy choices the Legislature had left to the Commission.

The Texas Lottery Commission (as the opinion described it): The opinion described the Commission as having broad discretion under the State Lottery Act to adopt rules governing the establishment and operation of the lottery, so long as the rules do not conflict with state or federal law, and it found the Texas Triple Chance rule within that discretion.

Lottery players (as the opinion described it): The opinion described Texas Triple Chance as meeting the legal definition of a lottery (a prize, awarded by chance, for paid consideration), so it treated the game as a lawful state lottery game rather than something outside the lottery framework.

Common questions

What makes something a "lottery" under Texas law?
The AG explained, drawing on the State Lottery Act and the Texas Supreme Court, that a lottery has three elements: a prize is offered, the prize is awarded by chance, and the player gives consideration (pays) for the chance to win. Texas Triple Chance had all three.

Is it legal for the Texas Lottery to use a fixed prize amount?
The AG concluded it is. The office found nothing in the Texas Constitution or the State Lottery Act that prohibits the Commission from offering a preset prize amount regardless of how many tickets are sold.

Can the Lottery keep jackpot money if no one wins?
The AG concluded the Commission could. Neither the Constitution nor the Act requires the Commission to carry forward unclaimed prize money to a later winner, so retaining it does not by itself make the game unconstitutional.

Why would a court defer to the Lottery Commission's decisions?
The AG explained that when a statute leaves room for policy determinations, courts normally defer to the agency's interpretation unless it is plainly erroneous or inconsistent with the statute or rule. The Act's silence on how prizes must be awarded suggested the Legislature gave the Commission that discretion.

Background and statutory framework

The constitutional authorization for the state lottery is article III, subsection 47(e) (Tex. Const. art. III, § 47(e)). The Legislature implemented it through the State Lottery Act (Tex. Gov't Code Ann. § 466.001 (West 2012); id. §§ 466.002-.453 (West 2012 & Supp. 2013)), which authorizes the Commission to adopt rules governing the types of games conducted (id. § 466.015(c)(1) (West 2012)) and charges the Commission with administering the Act (id. § 466.015(a) (West 2012)) with discretion limited only by conflicts with state or federal law (id. § 466.015(c)).

The Commission adopted the Texas Triple Chance rule (16 Tex. Admin. Code § 401.322 (West 2014)), which sets the $2 play and three sets of seven numbers (id. § 401.322(d), (e)(2)), the field of 55 (id. § 401.322(d)), the daily drawings of ten numbers (id. § 401.322(f)(1)-(2)), and the prize table topping out at $100,000 (id. § 401.322(d), (h)(1)(A)).

In assessing constitutionality, the AG applied the presumption that an agency rule is valid (Tex. Liquor Control Bd. v. Attic Club, Inc., 457 S.W.2d 41, 45 (Tex. 1970)), defined "lottery" from the Act (Tex. Gov't Code Ann. § 466.002(5) (West 2012)), and matched it to the Texas Supreme Court's three-element test (City of Wink v. Griffith Amusement Co., 100 S.W.2d 695, 701 (Tex. 1936)). Finding the prize, chance, and consideration elements satisfied (16 Tex. Admin. Code § 401.322(h)(1)(A), (e)(2)), the AG applied the deference courts give agency policy choices (TGS-NOPEC Geophysical Co. v. Combs, 340 S.W.3d 432, 438 (Tex. 2011)) and noted that other Commission games already used preset prizes with the possibility of no jackpot winner (16 Tex. Admin. Code §§ 401.307, .316, .320).

Citations

Constitutional, statutory, and regulatory provisions:

• Tex. Const. art. III, § 47(e) (Legislature may authorize the State to operate lotteries)
• Tex. Gov't Code Ann. § 466.001 (West 2012) (State Lottery Act)
• Tex. Gov't Code Ann. §§ 466.002-.453 (West 2012 & Supp. 2013) (State Lottery Act provisions)
• Tex. Gov't Code Ann. § 466.015(c)(1) (West 2012) (rules governing types of games)
• Tex. Gov't Code Ann. § 466.002(5) (West 2012) (definition of "lottery")
• Tex. Gov't Code Ann. § 466.015(a) (West 2012) (Commission administers the Act)
• Tex. Gov't Code Ann. § 466.015(c) (Commission rulemaking discretion)
• 16 Tex. Admin. Code § 401.322 (West 2014) (Texas Triple Chance game rule)
• 16 Tex. Admin. Code § 401.322(d), (e)(2) (play structure)
• 16 Tex. Admin. Code § 401.322(f)(1)-(2) (daily drawings)
• 16 Tex. Admin. Code § 401.322(h)(1)(A) (prize table)
• 16 Tex. Admin. Code §§ 401.307, .316, .320 (other games with preset prizes)

Cases:

• Tex. Liquor Control Bd. v. Attic Club, Inc., 457 S.W.2d 41, 45 (Tex. 1970)
• City of Wink v. Griffith Amusement Co., 100 S.W.2d 695, 701 (Tex. 1936)
• TGS-NOPEC Geophysical Co. v. Combs, 340 S.W.3d 432, 438 (Tex. 2011)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-1074
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2014/ga1074.pdf

Original opinion text

Best-effort transcription from the official PDF. Minor extraction artifacts were corrected; the linked PDF is authoritative.

ATTORNEY GENERAL OF TEXAS
GREG ABBOTT

August 8, 2014

The Honorable Robert F. Deuell, M.D. Opinion No. GA-1074
Chair, Committee on Economic Development
Texas State Senate Re: Whether Texas Triple Chance, a game
Post Office Box 12068 proposed by the Lottery Commission, violates
Austin, Texas 78711-2068 the Texas Constitution (RQ-1185-GA)

Dear Senator Deuell:

You ask whether a new game, Texas Triple Chance, created by the Texas Lottery Commission (the "Commission") violates the Texas Constitution.[1] Article III, subsection 47(e) of the Texas Constitution provides that "[t]he Legislature by general law may authorize the State to operate lotteries." TEX. CONST. art. III, § 47(e). Pursuant to this authority, the Legislature has enacted chapter 466 of the Government Code, titled the State Lottery Act ("the Act"). TEX. GOV'T CODE ANN. § 466.001 (West 2012); see generally id. §§ 466.002-.453 (West 2012 & Supp. 2013). Under section 466.015 of the Act, the Commission "may adopt rules governing the establishment and operation of the lottery, including rules governing ... the type of lottery games to be conducted." Id. § 466.015(c)(1) (West 2012).

Pursuant to its rulemaking authority, the Commission has adopted a new administrative rule explaining the game design, operation, and prize structure for Texas Triple Chance. See 16 TEX. ADMIN. CODE § 401.322 (West 2014) (Tex. Lottery Comm'n). For each $2 play, "the player gets three sets of 7 numbers, or three Chances to win." Id. § 401.322(d), (e)(2). Each set "is selected from a field of 55 (numbered 1-55)." Id. § 401.322(d). Drawings for Texas Triple Chance will be held daily, Monday through Saturday, at which time "[t]en (10) different numbers from 1 through 55 shall be drawn." Id. § 401.322(f)(1)-(2). "If the player matches all 7 numbers in any one chance to the numbers drawn in the drawing, the player wins the top prize" of $100,000, subject to certain exceptions.[2] Id. § 401.322(d), (h)(1)(A). If a player matches 6 numbers in any one chance to the numbers drawn in the drawing, the player wins $500, and smaller prizes exist for a match of 5, 4 or 3 numbers. Id. § 401.322(h)(1)(A) (table). In describing Texas Triple Chance, you state that the game "contains a preset prize amount" and that "[i]n the event there is not a jackpot winner, the Texas Lottery will retain the jackpot prize money." Request Letter at 1. Based on these aspects of the game, you question whether it "qualifies as a 'lottery' under the guidelines set by the Texas Constitution." Id.

In reviewing the constitutionality of an administrative rule, courts begin with the presumption that the rule is constitutional. See Tex. Liquor Control Bd. v. Attic Club, Inc., 457 S.W.2d 41, 45 (Tex. 1970) (explaining that statutes are presumed constitutional and that agency rules should be reviewed under the same principles as statutes). The Texas Constitution does not define the term "lottery," but the term is defined in the Act to mean "the procedures operated by the state under [chapter 466 of the Government Code] through which prizes are awarded or distributed by chance among persons who have paid, or unconditionally agreed to pay, for a chance or other opportunity to receive a prize." TEX. GOV'T CODE ANN. § 466.002(5) (West 2012). This legislative definition of lottery is in accord with the Texas Supreme Court's articulation of the three elements necessary to constitute a lottery: "[1] the offering of a prize, [2] the award of the prize by chance, and [3] the giving of a consideration for an opportunity to win the prize." City of Wink v. Griffith Amusement Co., 100 S.W.2d 695, 701 (Tex. 1936). We will therefore analyze the Texas Triple Chance game in light of these elements. The Commission offers prizes for the game in the amount of $100,000, $500, $25, $5 or $2, depending on the number of correct number matches in a given play. 16 TEX. ADMIN. CODE § 401.322(h)(1)(A) (West 2014) (table). The award of the prize is contingent on matching a set of numbers to those drawn, which is decided by chance. Id. Each play requires $2 in consideration for an opportunity to win a prize. Id. § 401.322(e)(2). The Texas Triple Chance game therefore satisfies the three elements required to qualify as a lottery under Texas law.

The Commission is charged with administering the provisions of the State Lottery Act. TEX. GOV'T CODE ANN. § 466.015(a) (West 2012). The Legislature has given the Commission broad discretion to adopt rules governing the establishment and operation of the lottery so long as such rules do not conflict with state or federal law. Id. § 466.015(c). With regard to your stated concerns about the game, we find nothing in the Texas Constitution or the Act that prohibits the Commission from offering a preset prize amount regardless of the number of tickets purchased. Nor does the Texas Constitution or the Act require the Commission to carry forward any unpaid prize money to be awarded to an eventual winner.[3] If room for policy determinations exists in a statute, courts normally defer to the agency's interpretation unless it is plainly erroneous or inconsistent with the statute, regulation, or rule. TGS-NOPEC Geophysical Co. v. Combs, 340 S.W.3d 432, 438 (Tex. 2011). The lack of legislative directive on how lottery prizes are to be awarded suggests that the Legislature has given the Commission discretion to make those policy determinations. Thus, a court is unlikely to conclude that the Commission's Texas Triple Chance game is unconstitutional merely because it awards a preset prize amount regardless of the number of tickets purchased or because it does not carry forward any unpaid prize money to be awarded to an eventual winner.

SUMMARY

A court is unlikely to conclude that the Texas Lottery Commission's Texas Triple Chance game is unconstitutional merely because it awards a preset prize amount regardless of the number of tickets purchased or because it does not carry forward any unpaid prize money to be awarded to an eventual winner.

Very truly yours,

GREG ABBOTT
Attorney General of Texas

DANIEL T. HODGE
First Assistant Attorney General

JAMES D. BLACKLOCK
Deputy Attorney General for Legal Counsel

VIRGINIA K. HOELSCHER
Chair, Opinion Committee

Virginia K. Hoelscher
Assistant Attorney General, Opinion Committee

[1] Letter from Senator Robert F. Deuell, M.D., Chair, Comm. on Econ. Dev., to Honorable Greg Abbott, Tex. Att'y Gen. (Feb. 10, 2014), http://www.texasattorneygeneral.gov/opin ("Request Letter").

[2] "[I]n any drawing where the number of top prize-winning Chances is greater than ten (10), the top prize shall be paid on a pari-mutuel rather than fixed prize basis and a liability cap of $1 million will be divided equally by the number of top prize-winning Chances." 16 TEX. ADMIN. CODE § 401.322(h)(1)(A) (West 2014).

[3] Multiple games currently offered through the Commission also involve preset prize amounts with the possibility of no jackpot winner. See, e.g., id. §§ 401.307 ("'Pick 3' On-Line Game Rule"), .316 ("'Daily 4' On-Line Game Rule"), .320 ("'All or Nothing' On-Line Game Rule").