Lottery courier company Jackpocket has ceased operations in New Mexico, after a legal opinion from Attorney General Raúl Torrez declared its activities to violate state rules and regulations.
Torrez found that Jackpocket’s services constitute iGaming. His findings stated: “The Jackpocket app constitutes internet gaming. Consequently, its use within the State of New Mexico triggers the Indian Gaming Compact’s requirement that the State reopen good faith negotiations with the Tribes to evaluate the impact, if any, of internet gaming and consider adjustments to the Compact.”
Further to potential violations of the gaming compact, the Attorney General outlined several alleged breaches of state law. Jackpocket was found to be reselling lottery tickets at a markup without proper authorization, in contravention of Section 6-24-15(A) of the New Mexico Lottery Act.
“Jackpocket’s operations potentially run afoul of New Mexico law prohibiting any person from directly or indirectly, knowingly accepting for a fee, property, salary or reward anything of value from another to be transmitted or delivered for gambling or pari-mutuel wagering,” the opinion continues. This is relevant to Section 30-19-15, which prohibits accepting fees for transmitting bets.
Jackpocket Departs New Mexico After Texas Ban
New Mexico becomes the second state where legal opinion has seen the exit of Jackpocket as lottery courier services come under increased regulatory scrutiny. The first, Texas, banned them in a dramatic U-turn from the previous policy outlined. The Lone Star State lottery couriers’ economic impact was approximately $173 million. DraftKings-owned Jackpocket made $550 million in sales in Texas over five years.
Jackpocket entered New Mexico in March 2022 after signing a Memorandum of Understanding (MOU) with the New Mexico Lottery Authority. Torrez’s opinion suggests that the MOU authorizes internet gaming, which would, therefore, trigger a requirement to renegotiate the Indian Gaming Compact.
He stated: “The Memorandum of Understanding between the New Mexico Lottery Authority and Jackpocket constitutes the authorization of internet gaming in New Mexico. As such, it triggers the renegotiation required by Section 17 of the Indian Gaming Compact between New Mexico and the Tribes.”
Another point outlined by the AG’s office is that the MOU does not explicitly allow Jackpocket to sell lottery tickets at a markup, nor authorize the specific markup the company applies. The markup, therefore, likely violates the Lottery Act. It also adds that Jackpocket does not meet the criteria of a lottery retailer, stating: “lottery tickets shall be sold only by a lottery retailer who, pursuant to a contract with the authority, has been issued a certificate of authority signed by the Chief Executive Officer.”
Are Tribes the Barrier to Broader Legalization?
Jackpocket has temporarily suspended its services in New Mexico. Peter Sullivan, the SVP of Lottery at DraftKings, emphasizes that the company is seeking a resolution to the Attorney General’s concerns. There is currently no set timeline for the company’s return.
Jackpocket is still active in 17 states. The company has operated with digital currencies through Bitpay in the past, although this functionality is no longer supported. New Mexico currently has no online sports betting or gaming, so there’s a long way to go until crypto casino becomes a legal option in the state.
The only form of gambling in the Land of Enchantment is at tribal casinos, where retail sports betting and gaming is permitted.
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