Texas Lottery Case Returns to District Court Amid Money Laundering Allegations

AUSTIN, Texas – A high-profile lawsuit regarding the alleged rigging of the Texas Lottery is back in a Travis County district court, following a ruling by the judge in Texas’ Business Court. The move comes after the plaintiff, Jerry Reed, decided to drop certain allegations that previously brought the case under the Business Court’s jurisdiction.

The lawsuit stems from Reed’s $7.5 million Lotto Texas jackpot won in May 2023. One month earlier, Rook TX, a New Jersey-based company, claimed a $95 million jackpot but allegedly misrepresented its date of formation, violating Texas law. Reed’s legal team argues that he is entitled to the $95 million and is also working to uncover a potential money laundering scheme associated with Rook TX.

On Monday, Judge Andrews ordered the case to be sent back down to the 353rd District Court. In her opinion, she explained how the case originally moved to her court. “Although this is not the kind of case one might typically expect to find in the Business Court, Reed (perhaps unintentionally) pleaded his way into this Court’s jurisdiction,” she wrote.

State law generally assigns cases like this one to the district court, but Rook TX had previously removed the case to the Business Court. Reed later requested it be sent back, a motion that was initially denied.

Reed’s attorney, Manfred Sternberg, expressed his concerns about the Business Court. “It is a newly created court of limited jurisdiction, and its jurisdiction over the subject matter is not clear,” he told Texas Scorecard.

On August 5, Reed amended his complaint to remove earlier allegations related to Rook TX’s formation date and other claims, which stripped the Business Court of its jurisdiction over the case. Judge Andrews noted, “Now, although later events generally do not divest a court of jurisdiction once properly acquired, Reed has successfully pleaded his way out of this Court’s jurisdiction by removing all such claims from his pleadings.”

Sternberg praised Judge Andrews for her “well-reasoned written opinion” and characterized the ruling as a positive step. The decision is viewed as a win by critics of the Business Court’s authority and Judge Andrews’ earlier rulings on the case.

Earlier in July, Judge Andrews had ordered disclosures regarding hidden corporate interests behind Rook TX’s alleged lottery rigging scheme, providing a level of oversight in this controversial situation. As of now, Rook TX has not responded to Texas Scorecard’s request for comment.