The legality of Colorado's new "courier" model for selling lottery tickets is being called into question, as a state audit raises concerns about its compliance with existing regulations.

The Colorado Office of the State Auditor has found that this new model, where customers purchase lottery tickets through an app or website of a courier for mail or digital delivery, is currently unregulated by the Colorado Lottery Commission and may not align with statutory requirements.

According to the audit, the lack of regulation for couriers poses risks to the integrity, honesty, and fairness of the lottery business.

State law mandates that lottery tickets should only be sold by licensed retailers at physical locations. However, with the courier model, customers buy tickets from the courier, who is not licensed to sell tickets, making it unclear who the actual ticket seller is. The courier obtains the tickets from a licensed retailer operating at a physical location. This new business model was introduced in Colorado in 2019.

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The audit also revealed some unusual winning patterns in the lottery reports.

In the 2022 fiscal year, a retailer associated with one of the new lottery couriers had $12.6 million in lottery sales, which is five times higher than the next highest-selling retailer in the state. Moreover, there were no documented investigations by the lottery staff into these unusual winning patterns. One winner managed to claim 44 prizes totaling $38,500 in just one quarter.

The Colorado Lottery, which falls under the Department of Revenue, has agreed to all 13 recommendations put forth by the audit. These recommendations include:

• Determining necessary changes to the state's regulatory framework to ensure the courier System complies with lottery rules.

• Establishing a system to investigate unusual winning patterns.

• Improving retail compliance.

• Enhancing the commission's oversight of lottery functions.

The audit's findings shine a light on potential vulnerabilities within the lottery system and underscore the need for robust oversight and compliance measures.