Oct. 3, 2013 – The first thing that strikes you about Rebecca Paul Hargrove is the authority in her voice, mixed with a charm that was bred in the Midwest and sweetened in the South.
While a voice is really the only thing that could be striking about someone on a phone call, we were no less enamored by her uniquely powerful, somehow motherly air than if we’d been sitting in her office at the Tennessee Education Lottery Corporation.
We called Hargrove to hear her story – the story of the “Queen of the Lottery” – and to chat about the future of the lottery industry as the world moves ever further from brick-and-mortar retailers and point-of-sale merchandising.
“Let me tell you a story,” she said to us. She told us it was just a story about consulting for another lottery, how that can be a frustrating process of breaking tradition. But it’s also a story about Rebecca. It’s about how, after 30 years in the industry, she’s not just ready for the future of the lottery, she’s the one leading the charge.
“I was baking a ham one day,” she started. “I cut both ends off of it before I put it in the oven, and my husband looked at me and said, ‘why’d you do that?’ I said I don’t know, that’s how my mother baked ham.”
“So I called my mother and said ‘why’d you cut both ends of the ham off before you baked it,’ and she said ‘well, I don’t know, that’s how your grandmother baked ham.’ So I called my grandmother and asked her the same question and she laughed and said, ‘because I never had a pan big enough.’”
“I looked at the staff and said, ‘If you can’t tell me why you do something, we’re gonna look at it from another direction.”
This was a theme she brought up several times as we spoke Thursday – lotteries want to grow, they want to move forward and find new ways to play, but are often mired in tradition, and unsure of their limits in the industry’s rapidly changing landscape.
While many of us think that government agencies, including state lotteries, are almost required to be wary of change, Hargrove pointed out that the people behind the games are often as ready to move forward as the players.
Rather than stereotypical “government workers”, it is the limits placed by law that keep lotteries across the U.S. from marching headlong into the future.
In many ways, that’s a good thing. “The lottery is a zero-tolerance business,” says Hargrove. “You cannot make mistakes or you lose the public trust.” That’s why lawmakers hesitate to pass online gambling laws, and why most Americans can’t buy lottery tickets with a debit card. Even with these limitations, just about every lottery is a success story.
Earlier this month, the secretary of the Florida Lottery penned a story reminding Floridians that 97 percent of the money collected through the Lottery goes back to the people of Florida. The majority of that 97 percent is funnelled into schools and scholarship programs, and over the past 25 years, the Florida Lottery has contributed more than $25 billion to education.
In Georgia, former Gov. Zell Miller was brought to tears as he recalled his work starting Georgia’s HOPE Scholarships during his time at the Lottery. Since 1992 the Georgia Lottery has returned more than $7 billion to Georgia education programs including the HOPE Scholarship.
Both of these success stories have at least one common denominator – Rebecca Hargrove. Hargrove was called on to start the lotteries in Florida and Georgia from scratch and each has grown to become hugely successful.
Her record only improved as she moved slightly further north to Tennessee, the third state that asked Hargrove to bring their lottery dreams to fruition – though they might think they’re still dreaming.
In just a few short months after she was chosen as the CEO, the Tennessee Lottery began selling tickets – to date the quickest turnaround from start-up to ticket sales in the lottery industry.
Speed was certainly not traded for quality either; the record for the fastest launch was only the first that Tennessee’s Lottery would claim. Now, they have possibly the longest continuous streak of record-breaking sales in industry history, beating their own benchmarks nine years in a row.
The Tennessee Lottery’s success is due in part to its differences from traditional state government agencies. Set up as a corporation governed by a board of directors, the Lottery operates much like any other private-sector business, using market-driven strategies and avoiding much bureaucratic “red tape”.
In the past nine years, this business-like approach has generated profits exceeding $2.7 billion. The Lottery’s efforts have funded more than 700,000 scholarships and grants for students in Tennessee colleges, and provide dollars for important pre-kindergarten and after-school programs for children.
The people who run lotteries are dedicated to the causes they serve, and like any business, they’re always looking for the best new way to raise dollars for their benefactors. In the private sector, those benefactors are most often company shareholders; the Lottery’s shareholders are the public, the Lottery’s dedication is to the public benefit..
Many state lotteries across the country, including the three Hargrove raised herself, have begun looking at the internet as that “best new way” to raise money. The first steps in bringing the lottery online are internet-based Second-Chance promotions and VIP clubs which closely resemble the lottery in the digital world – only the betting has yet to move online.
We asked Hargrove how lotteries, particularly her “new” start-up in Tennessee, could adapt with the world as our lives continue to move online.
First, she said, “you hire smart people and you let them do their jobs. You hire people who are excited about…moving us forward so we can raise even more dollars for the important education programs we fund.”
“We’re continually looking at how best to reach the player who has probably purchased a large majority of their everyday goods and services over their iPhone,” Hargrove told us.
“So we’re [asking], ‘how’s the best way to integrate that into what we do on a day to day basis, while still staying within our statutory limits?’” Right now for Hargrove and the Tennessee Lottery, that’s an online loyalty program like those in Georgia and Florida, the VIP Player’s Suite.
While Hargrove understands her limits, and understands that “each state has its own political reality” surrounding the lottery’s operations, she hardly hesitated when we asked what she’d do if she were free from the politics surrounding her work. “I’d move pretty quickly to what the rest of the lottery world outside the US is doing, and that’s the ability to purchase tickets on mobile,” she said.
“[Giving players] the ability to purchase on your mobile phone with a payment vehicle that makes sense, I think is where we need to be as the folks 25-30 move into that 35-40 age group, where that’s how they’ve purchased everything their whole lives.”
“I think we need to go there if we want to continue to provide the kind of scholarships we do…it’s important that we continue to raise those funds.”
“You’re only limited by your imagination and public policy,” Hargrove told us. As lotteries move players into online VIP Clubs, Second-Chance Zones, and begin to offer online casino games, it would seem that public policy might be stepping out of the way, letting the minds behind the lottery find the best new ways to raise money.
But, Hargrove said, that is probably an illusion. The process of moving lotteries into the digital world won’t be easy. Though she’s ready for lotteries to take the next step towards digital, she told us not to bet on it anytime soon: “I think the transition will be longer than any of us would like it to be.”