SB 28 is projected to result in a negative fiscal impact of $52.46 million to the state’s General Revenue funds over the 2026-2027 biennium. This loss is primarily attributed to the prohibition of online and mobile lottery ticket sales, which would eliminate approximately 2.7% of total Texas Lottery sales, currently facilitated by third-party digital lottery couriers. The Texas Lottery Commission (TLC) reports that these online-related sales generated approximately $229.4 million in 2024, with the state’s net share (after payouts and administrative costs) amounting to 24% of total sales. As a result, removing this revenue stream would require additional General Revenue funding to offset lost contributions to the Foundation School Program (FSP), which is partially funded by lottery proceeds.

Additionally, SB 28 creates new misdemeanor offenses for individuals who purchase lottery tickets via online platforms and for third-party entities that facilitate digital sales for compensation. While court cost revenue may increase due to new criminal penalties, the Legislative Budget Board (LBB) states that the number of additional misdemeanor cases cannot be estimated, making it difficult to determine whether such enforcement actions would offset the bill’s negative revenue impact. Furthermore, the bill would require rulemaking and enforcement actions by the Texas Lottery Commission, potentially adding to administrative costs without an identified funding mechanism.

Although this legislation results in a net revenue loss for the state, supporters may view this as an acceptable trade-off if the goal is to restrict state-sponsored gambling expansion. However, it is important to consider whether the bill's revenue impact will lead to higher demands on General Revenue to support education funding, or if it will encourage alternative proposals to replace lost lottery revenues in the future.

SB 28 aligns with a limited-government approach to gambling by preventing the Texas Lottery from expanding its operations online. The Texas Lottery, as a government entity, exists outside of the principles of free enterprise; it is a state-run monopoly that profits off gambling while using taxpayer-backed infrastructure. While Texas Policy Research generally opposes restrictions on private commerce, this bill does not target private businesses broadly; it restricts a state-sponsored gambling system from leveraging digital platforms to expand its reach.

However, SB 28 does not go far enough in addressing the underlying issue: the existence of the Texas Lottery itself. A more robust approach would either abolish the lottery entirely or privatize it, removing the government from the gambling industry altogether. Additionally, the criminal penalties for purchasing tickets online are unnecessary and could be better addressed through civil fines rather than misdemeanor charges.

Therefore, Texas Policy Research recommends that lawmakers vote YES on SB 28 while also considering amendments as described to strengthen the bill. With these amendments, SB 28 would move beyond merely restricting digital lottery sales and instead serve as a meaningful step toward limiting state-sponsored gambling in Texas.

• Remove criminal penalties for individual buyers; individual consumers should not face misdemeanor charges simply for attempting to purchase a ticket online.
• Establish a licensed third-party vendor system instead of a complete ban
• Add a provision acknowledging that this is a step toward restricting government involvement in gambling, with a long-term goal of reducing or eliminating the Texas Lottery altogether

• Senate Committee on State Affairs Committee: 9Y/0N (2 Absent)

• HB 389 (Same As)
• SB 79 (Same As)