Oregon cracks down on lottery ticket resale schemes in new bill

Winning the lottery is supposed to be all about luck — but in Oregon, some people have found a way to game the system. A long-standing loophole has allowed middlemen to buy winning tickets at a discount, cash them in for full value, and dodge taxes, child support, and other state debts in the process.

Now, state lawmakers are looking to shut it down with a new bill that would outlaw the shady ticket resale business. But will it actually put an end to the practice?

Lottery discounters in Oregon

For those unfamiliar with this practice, there are winners of large prizes in the Oregon Lottery who are reselling their tickets to so-called lottery discounters that operate around the state. These discounters annually buy millions of dollars in winning lottery tickets — mostly video lottery and keno tickets with prizes over $1,500 — from the original winner, but at a steep discount.

These discounters then claim the face value of the prizes when they claim the winnings at payment centers in Wilsonville and Salem.

Why are these discounters needed?

This scheme is basically enabling tax evasion. It's allowing these winners to avoid past due child support and other debts to the state, which would normally be garnished from their prizes.

Because of that, these winners are more incentivized to work with these sketchy operators to cash in their winning tickets for them. In some states, officials say this practice has been linked to money laundering.

House Bill 3115

On Thursday, January 30, 2025, members of the House Committee on Commerce and Consumer Protection heard testimony in the first public hearing for House BIll 3115. The bill is sponsored by Rep. John Lively, a Democrat from Springfield.

House Bill 3115 would specifically ban individuals from selling or buying a winning ticket or share of a ticket or claiming a winning ticket or share for another person for compensation.

Despite how shady this practice seems, the lottery has known about it for some time. In fact, these discounters are well known to employees at the payment centers since they regularly show up with stacks of winning tickets to claim all at one time.

This practice is also shortchanging the state on taxes. The discounters said they are keeping receipts for their ticket purchases and deduct that price as a business expense on their annual taxes. Therefore, the state is getting shortchanged because it's only taxing the discounter's net gain and not the full value of the prize.

Convenience is winning out

Matt Shelby, the Oregon Lottery's director of communications and policy, told The Oregonian that people who win lottery prizes of $1,500 or more must claim them at a payment center or by mail. Because of that, some winners are willing to sell their tickets at discounts of up to 50% because they don't want to drive to one of those payment centers.

Shelby also said some of these winners are worried the payment center is going to check their immigration status, which Shelby said isn't true. They may also not want someone else to find out about their winnings or avoid paying back child support or other debts to the state.

State law is currently vague

The current laws in Oregon are vague, saying they prohibit the “assignment” of winning tickets. While the discounters are clearly not the actual winners, the enforcement is difficult because lottery play is anonymous in Oregon, and the state has no way of proving that a ticket has changed hands.

The Oregon Lottery currently prohibits any of its retailers from purchasing winning tickets at a discount.

While the new bill was introduced in Oregon on Thursday, no action was taken. There was no opposition to the bill at the hearing, and Gov. Tina Kotek has previously expressed her support for addressing the issue.

Other states have banned the practice

Oregon would not be the first state to tackle this issue if the bill gets passed. Texas made it a felony for a prize winner to sell their right to claim a prize. In 2014, Georgia instituted a policy where they started investigating frequent winners. Since then, they have cracked down by refusing to pay related claims. In Massachusetts, they have jailed individuals who have been involved in big discounting operations.

Enjoy playing the Oregon Lottery, and please remember to play responsibly.