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Tennessee Lottery raking in record profits

Oct 9, 2011, 2:58 pm

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Tennessee LotteryTennessee Lottery: Tennessee Lottery raking in record profits

As annual sales approach $1.2 billion, players probably will see even more games

Despite the recession, one Tennessee financial institution is having a banner year.

The Tennessee Education Lottery is raking in record profits — selling nearly $1.2 billion in scratch-off tickets, nightly drawings, and multi-state mega-jackpot games in its latest fiscal year.

While 17 other states' lotteries also hit all-time highs, the 7-year-old Tennessee lottery is growing faster than most, outpacing national lottery growth rates by 63 percent.

Gambling industry observers suggest that, as a result of either dreams or desperation, the soft economy may be pushing consumers to buy more tickets, while Tennessee lottery CEO Rebecca Hargrove says she believes sales would be even higher in better economic times.

Whatever the reason, one thing now appears a sure bet: With the lottery's success paying off, Tennesseans are soon likely to see an even bigger lottery presence, with more games offered in more places for even larger prizes.

Some state lawmakers, concerned about shortfalls in the state budget, are calling for the lottery to increase sales by at least 8 percent to fund educational scholarships.

To accomplish that, lottery officials said big changes could be on the horizon: persuading for the first time big-box stores such as Walmart and Target to add lottery sales, allowing gamblers to pay for their tickets with debit and credit cards (instead of the cash required now), adding new options to play additional games online and potentially introducing new slot-style video gambling machines to corner convenience stores — a huge profit driver in states that already have them.

"The entire industry is looking for ways to crack what we would call the big-box store," Hargrove said. "That's where we believe the big growth will come. But we are doing a whole range of things that combined have allowed us to move beyond industry growth, and we'll continue to do that."

It's an expansion trend that other states facing similar budget shortfalls are hopping on board as well, according to David G. Schwartz, director of the center for gaming research at the University of Nevada, Las Vegas.

"In the economic climate today, nobody wants to raise taxes and people don't really want to cut revenues, so if running a deficit, it's easy to turn your thoughts to increasing lottery revenues," Schwartz said.

More aggressive state lottery practices — fueled in some locales by budget shortfalls or uncertain tax revenues — comes even as the casino industry nationally watches its spending more carefully.

Casino executives attending a Las Vegas trade show last week said they're spending less time thinking about new card tables or slot machines and trying to lure customers with spiffy retail, enhanced restaurants or other attractions to compete for limited leisure spending.

CEO Virginia McDowell of Isle of Capri Casinos, for example, said she expects economic uncertainty to linger a few more years, "and it really makes it hard for people to feel good about spending their leisure dollars when you have 250-point swings in the stock market on a given day."

Gaming equipment makers are starting to cut their prices in response — offering more discounts, longer trial periods or even free slot machines if a casino buys a certain amount of new equipment, gaming analysts said.

State faces shortfall

The Tennessee Education Lottery Corp. launched in 2004 with four instant games. Since then, it has introduced more than 300 instant games — between 38 and 42 at any given time — and currently operates five drawing-style games. In the process it has earned $7.8 billion in gross sales revenues, paid out nearly $4.7 billion in prizes (82 prizes of a million or more) and transferred more than $2 billion into Tennessee education funds for college scholarships and after-school programs.

Despite steadily increasing earnings — including a 3.1 percent revenue jump from fiscal years 2010 to 2011 — the state is facing a $22 million shortfall in scholarship money that the lottery is meant to fund.

The reason has more to do with legislative action than lottery earnings: Since 2008, lawmakers have expanded the categories of students eligible for the $4,000 scholarships, stretching the funds to pay for many more types of scholarships than the lottery was originally intended.

State senators including Jim Kyle, D-Memphis, have suggested in recent weeks that the lottery boost its ticket sales to close the budget gap in lieu of making cuts to scholarships.

"A mere 8 percent increase in ticket sales would not only cover the estimated $22 million funding gap, it would also erase our dependence on interest to make up the difference in the budget," Kyle said. Rather than cutting scholarships, "I believe instead we should ask, 'What new efficiencies or revenue options can we explore to ensure that as many Tennesseans as possible have a higher education degree?' "

A Lottery Stabilization Task Force formed by Lt. Gov. Ron Ramsey in August is expected to reconvene before the end of the month to weigh options.

In the meantime the Tennessee Education Lottery Corp., a quasi-government body, continues to expand games and prizes.

Calls add personal touch

Hargrove has seen her own job description expand in recent months to include manning the phone lines.

"Hello, this is Rebecca. I'm president of the Tennessee lottery. Do you remember entering a ticket online?" That was the start of a phone call to a young man to whom Hargrove reached out on a boat with his buddies as they caught the breeze on a Savannah, Tenn.-area lake. A lot of "hooting and hollering" followed when she told the man he'd won $100,000.

The calls are part of the new online Play It Again! game, which allows players to enter serial numbers of non-winning scratch-off tickets for a chance at another drawing for prizes that range from Tennessee Titans tickets to tens of thousands of dollars.

Hargrove makes calls to each winner personally. She has made 194 of them since the program launched last year.

The lottery has been able to boost revenues mainly through introducing new games and ways to play, Hargrove said. The Play It Again! program helped drive instant ticket sales up by $37 million to $648 million in 2011 over 2010. So, too, did expanding the number of instant games offered from 38 to 40.

The lottery is adding a new nationwide Powerball game in January.

It has maintained the same advertising expenditures over the past two years, spending roughly $9.4 million on a mix of television, radio and billboard ads, a portion of the budget that University of Nevada, Las Vegas gambling studies suggest is slightly less in proportion to sales than most other lotteries. This year it expects to spend $11 million.

Lotteries around the country are making increased forays into having an online presence, says Schwartz, the gaming professor. The Tennessee lottery added a Facebook page last month.

"That's the next wave: You're going to see tickets sold online and games online," he said.

While paying for online play is currently illegal, Hargrove said the lottery would have to move with the times to attract a younger generation of gamblers, who will probably pay for most purchases with smartphones in the near future.

The younger generation is more likely to question the need to run to a convenience store for a lottery transaction rather than simply logging on to their computers or mobile devices.

No matter the method of purchase, though, some critics question whether it's proper state policy to advertise and coax spending on gaming from consumers hard pressed by the sluggish economy.

At a Brentwood Daily's gas station and convenience store last week, regular Doug Taylor came in for his twice weekly visit to buy Powerball tickets.

"I play for the hope," said the software engineer who said he always spends $5 to play the same numbers each time. "Nothing more, just the hope."

Behind the counter, clerk Ron Spencer said that he's noticed an uptick in customers since he started working in January.

Days that Powerball or Mega Millions drawings had high jackpots used to bring in extra customers, but now there's a reliable stream of customers that keep lines five or six people deep all evening long, he said.

Most of his regulars are like Taylor, but he sees more customers like the woman who comes in each Friday in a thin T-shirt and spends $200 on scratch-off tickets, standing at the counter to play and learn her results.

"I think, 'Should I be like a bartender and say you're cut off?' " he asked.

Thanks to Helen for the tip.


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18 comments. Last comment 10 years ago by TheOtherOne.
Page 1 of 2
temptustoo's avatar - cat anm.gif
United States
Member #89194
April 2, 2010
2826 Posts

CHEATING Everyone is the reason for the win fall. !!! Tennessee has always been crooked !! I refuse to play in that state..

    dpoly1's avatar - driver
    United States
    Member #66139
    October 16, 2008
    1998 Posts

    Looks like someone is doing something right in Tennessee !

    Looking forward to Wednesday's Powermillions !


      tiggs95's avatar - Lottery-036.jpg

      United States
      Member #47419
      November 4, 2006
      3930 Posts

      Isn't this where ridge runner lives?....They said maybe more games...SUCKERS!!!..

                                                                Pure luck

        TnTicketlosers's avatar - Lottery-065.jpg

        United States
        Member #71118
        February 19, 2009
        1224 Posts

        When people cant win what do that expect,sure they got a lot of money.I dont play here either anymore,crooks.Dont worry RIDGE will be here soon to comment.

          time*treat's avatar - radar

          United States
          Member #13130
          March 30, 2005
          2171 Posts

          Record profits for the lottery, but where are the players' yachts?

          In neo-conned Amerika, bank robs you.
          Alcohol, Tobacco, and Firearms should be the name of a convenience store, not a govnoment agency.

            dpoly1's avatar - driver
            United States
            Member #66139
            October 16, 2008
            1998 Posts

            Record profits for the lottery, but where are the players' yachts?

            Duh ........... in the water ! Crazy

              joshuacloak's avatar - mask

              United States
              Member #32536
              February 12, 2006
              711 Posts

              i see this more as classic dems trying to run amock in tn.


              The reason has more to do with legislative action than lottery earnings: Since 2008, "dem"  lawmakers have expanded the categories of students eligible for the $4,000 scholarships, stretching the funds to pay for many more types of scholarships than the lottery was originally intended.


              that's what the dems do best,  expanded any progrem that gives free stuff to people"its how they win votes" ,  this one a good one thro, students getting money for future jobs, etc classic sell to public.


              but none the less,    if the funding comes form Taxes,  they just say, raise tax's, and if the funding comes form people buying stuff, they just say, will sell more stuff lottery!

              the fact where settings records,is good, i think we can sell a lot more, so dems may have a point, but   yet way down the road their a shortfall in math,    is cease  atm, that's cease of  dems at work, creating budget shortfalls is their Way of Life.


              i think we should only allow smartest students to get the free money, it shows they have Taken the time to study , i mean if students are getting free money to help them, they better be putting in work,  giving ever idiot, who does not put in work"learning hard"   does not deserve a hope scholarships as we call them here

              but dems want ever poor child who don't grow up studying hard to get the money, this is a simple, pity party of dems, even thro the tn lottery making money, trying their damest to create a budget issue cease it a "must"

              however, we should hate that CEO of ours, that RNG mistake"no 1111 on pack 4, etc", should of never happened and i want her fired for it changin us over.

              however, 2nd chance drawing is smart play by her leadership . and its really just a raffle with only 1 winner, for other chance at top prize. on loser tickets

              i enjoy it, and think ever lottery should have a 2nd chance for all losers via random raffle, it sure allows me to "dream" of winning it big, even if ticket a loser.

              as for her future plans, ya am 25, and playing online is future.  so is playing with my bank card"thro with my new card fees have me going cash  is other story"

              thro allowing people paying with cards,    will that make the pb,mm winners wait more then 2 weeks as it stands now?    you know  to , if they claimed asap that is, to get their money by 2 weeks, as thats how long it takes to get all money form all states into  1 account to wire to the winner


              am hoping going form cash to credit to pay for lottery stuff, just does not make us wait any longer. it shouldnt if they do it right, but credit payin for lottery tickets has not really been widely tested in states? has it?


              anyway i just hope tn keeps the records up,   1 more thing,  tn lottery under her leadership, killed our states pack 5, and replaced it with pack 6 game that sucks balls

              its called tn cash, its far FAR worst for us players.   , and its rollovers at begining are 20k for crying out loud, when old pack 5 with leser odds had a mini rollover of 40k,it started at 40k, then to 80k, then to 120k, and up and up it went

              now pack 6 starts with 200k, and only goes up for 20k, for over month  plus before it even goes above 20k mini rollover, its a joke

              i mean wtf. that thing at ever money level, had better roll overs then our freaking pack 6, thats a bad designed game, and she killed a good game off to make it so we be FORCED to pay pack 6

              this pack 6 game sucked so bad, they knew  we just keep playing pack 5, they had to kill it to make this game our only in state only option

              hell hot lotto would of offered us a better pack 6 game, that fit below pb and mm, and she should of kept pack 5,    this ceo and her staff, SUCK  for us players.

              she deserves to be fired for that f up  and pack 5 needs to return  like it was. as am sure she made less sells with our pack 6, then our old pack 5

                Littleoldlady's avatar - basket
                United States
                Member #487
                July 15, 2002
                17638 Posts

                I think it is okay if the students get a $4,000.00 per year scholarship to help them out, however, if they don't complete their classes or drop out, they should have to pay the money back.  Only about 1/5 of all students who enter college will go the distance and graduate with a 4 year degree or higher.  I think they should be allowed to get the money for 2 year colleges  or job training programs and for ONLY 2 years and not 4.  To me any student who demostrats that they can and will fulfill the scholarship requirements should get one.  College should just not be for straight A students.

                TN is making record profits because their games are not paying out a lot of money.  Most time the P3 is only around 20+ thousand and the P4 is pitiful at best.  Scratch offs are questionable also.  A lot of numbers players quit playing the numbers and started playing scratch offs. 

                The cash 5 game sucks to high heaven.  It is just another PB game with a different name.  Any game where the players seem to have a slight advantage, the powers that be change it to make it worse.

                As far as using debit or credit cards..they need not go that way.  Gambling should be a cash ONLY business!  Imagine folks who are desperate spending all of their money on the TN lottery and not winning anything.  Talking about going postal!!  That is too much. 

                If they want to make more money, have fairer games period.

                If you know your number is going to hit, have patience and then KILL IT!

                You never know when you will get another hit.

                  joshuacloak's avatar - mask

                  United States
                  Member #32536
                  February 12, 2006
                  711 Posts

                  littleoldlady, we don't have a "The cash 5 game"

                  am guesting you mean the pack 6, we call tennessee cash, our old pack 5, had way better olds and rolled way better.

                    TnTicketlosers's avatar - Lottery-065.jpg

                    United States
                    Member #71118
                    February 19, 2009
                    1224 Posts

                    Repeat,Repeat,Repeat,Repeat     Cant everyone see it's a scam

                      sully16's avatar - sharan
                      United States
                      Member #81738
                      October 28, 2009
                      92358 Posts

                      Repeat,Repeat,Repeat,Repeat     Cant everyone see it's a scam

                      See if you can get ball drawing put on the ballot, if the voters come out in force the state will listen, hopefully.

                      Happy Thanksgiving ! Turkey

                        rdgrnr's avatar - nw barkeep.jpg
                        Grand High Exalted Mystic Ruler
                        The Hall Of The Mountain Kings
                        United States
                        Member #73902
                        April 28, 2009
                        15065 Posts

                        What a depressing story.

                        The Dragon Lady will naturally take all the credit for the uptick in revenue, when in reality she's just along for the ride like a lot of other Directors in a terrible economy where unemployed people are trying new avenues to maintain some semblance of a decent lifestyle.

                        This news will probably assure her tenure as Lottery Director under Tennessee's RINO Governor, thereby maintaining and enhancing Tennessee's status as the backwater swamp of all state lotteries.

                        Other state lotteries like watching Tennessee to see what doesn't work and to see how much BS players will take before saying "no more".

                        And what they see is that players - Tennessee players anyway - are gluttons for punishment.







                        "The only thing necessary for evil to triumph is for good men to do nothing"

                                                                                                                    --Edmund Burke



                          TnTicketlosers's avatar - Lottery-065.jpg

                          United States
                          Member #71118
                          February 19, 2009
                          1224 Posts

                          She set it up for failure.

                            United States
                            Member #7853
                            October 15, 2004
                            11350 Posts

                            In 2004 and 2005 back when games were ball drawn i won over 25 grand here on Cash 3 and Cash 4 including once when i hit a pick 3 number ten times for 5,000 dollars.Something that will never happen again because after they went computerized/RNG in 2007 i immediately quit playing and haven't since.

                            At one point in time i was on fire with the numbers here but like anything good it didn't last.


                            Last time i hit was mid February of 2007 on a pick 4 number straight 4658 and me winning on that number enabled me to move where i now live today.


                            Rebecca Hargrove ruined the lottery here.