Tenn. Lottery CEO says tickets seem recession-proof, help fund college educations
NASHVILLE, Tenn. — You may not have heard of Rebecca Paul Hargrove, but in the lottery world, she's a celebrity.
The brash, hard-charging CEO of the Tennessee lottery has accomplished what nobody else has in the state-run gaming business. She ran the lottery in Illinois where sales topped $1.3 billion. Next, Hargrove moved to Florida, where she set a new record: $95 million in sales the first week.
In Florida, Hargrove's marketing strategy included appearing in ads and handing out checks. But some thought she was too flamboyant and she ultimately was fired.
She wasn't out of work long. Georgia tapped her to start its lottery and ticket sales increased 10 percent every year for the decade she was in charge.
Now the 60-year-old dynamo leads one of the nation's newest and most successful state-run gaming operations -- the Tennessee lottery.
Her critics say she's promoting a "fool's tax," taking advantage of people who are not financially sophisticated, and this at a time when most people don't have a lot of spare money.
Hargrove brushes off the notion that lotteries manipulate those who are low-income or uneducated.
"Well, you use the word 'tax' and I have never known taxes to be voluntary," she said. "If you don't pay your taxes, you are going to go to jail. If you don't buy your lotto ticket, you aren't going to jail."
"There are a handful of people who may buy more lottery tickets than they should and I wish that didn't happen," she said. "There are people who have addictions. I am addicted to Diet Coke. You can be addicted to anything. I'm not sure that makes shopping bad or Diet Cokes bad or lotteries bad."
Winning the Lotto: A Dream Come True
As the economy has crumbled, more and more have turned to the dream of that ultimate windfall.
"Lotteries are huge business," Hargrove said. "Let me put it in perspective for you. Last year, the movie industry ... all the box office receipts across the country were about $9 billion. Music: $20 billion. Salty snacks, pretzels, chips, all that stuff ... about $40 billion. Fifty-five billion dollars of lottery tickets were sold -- $55 billion!"
Her winning strategy is fueled by innovative TV ads and new games. The latest is a $20 scratch ticket called Tennessee Millionaires Club.
"The introduction of this game alone, our sales went up $7 million a week," she said. "We've had three million-dollar winners [in a month]."
Hargrove said one of the women who won the $1 million called her husband but couldn't get the words out that she had won. She could hardly breathe but managed to say, "I hit the... I hit the...," which made him think she had been in a car accident. Finally, she found the right words and told him she had hit the lottery.
Whether it was coincidence or her latest savvy marketing move, a fourth million-dollar winner happened to show up the day "Nightline" visited: Brandy Bowling, an unemployed single mother of two.
She said she felt as though her head was "about to explode."
"I can't wait to get the check in my hand to, you know, believe it's really happening," Bowling said. "My family has always worked hard and struggled, and to have this happen to us is awesome. I think my family deserves this."
Profiting From a Risky Business
Of course, the lottery is a game of chance that some say exploits those who can least afford it. But Hargrove doesn't view it that way.
"I am very proud of what I have accomplished in four states," she said.
And those states have been more than willing to return the favor. As a state employee in Tennessee, she can make up to $750,000 a year, including bonuses. Last year, she says she made about half a million.
That's three times the governor's salary.
"I think there are a lot of things that go into a decision that people make when they hire you," she said. "I haven't applied for a job in years. I've been recruited."
"If you look at what happened in Tennessee in particular, we started three weeks earlier than any other lottery," she said. "The profits we made from those three weeks were $30 million, which would pay what I make for 50 years. I am comfortable that the citizens of Tennessee have benefited from my ability to do a startup quicker."
Despite her sky-high salary, Hargrove is quick to remind everyone she has working class roots.
"I'm a poor little girl from the wrong side of the tracks in Indianapolis who has been very, very successful and very, very fortunate," she said.
Almost as if to prove she hasn't forgotten where she came from, she has the same artery-clogging lunch from Krystal Burgers nearly every day of the week.
And she's a big fan of Diet Coke.
"Oh, I drink a lot. I would guess on a work day ... I probably go through 10 or 12 pretty easily," she said.
She moves at a pace that would exhaust someone half her age. And it's been like that for years.
The Making of a Lottery Mogul
Hargrove has always been competitive, making it as far as fourth runner-up in the 1973 Miss America pageant, where she performed a gymnastics routine as Miss Indiana.
She got her big break when she was broadcasting and producing ads at a tiny TV station in Springfield, Ill., the state capital. That led to her Illinois lottery gig.
But throughout her record-breaking lottery run, Hargrove has had her vocal critics, such as Tom Grey, spokesman for StopPredatoryGambling.org, who says she made her fortune by marketing a nearly impossible dream to people with low incomes.
"Rebecca has been pitching what I consider to be a scam on the American public," he said.
Grey said more tickets are sold in "our barrios, our ghettos" than anywhere else because there are more lottery outlets in those neighborhoods.
But Hargrove would tell her critics: "You can't make the numbers add up when you say only poor people play. ... That just isn't where the vast majority of our numbers come from. Now, are there people who maybe buy a lottery ticket who shouldn't? Absolutely. I wish that didn't occur, but it's not my job or anyone else's job to tell people how to spend their discretionary dollar."
"Say you don't have enough money to go to a movie, you can't go bowling tonight, I don't know if you should get that Diet Coke," she said. "You know people who make less money tend to balance their discretionary income better than people who make a lot of money."
She is adamant that she's never marketed specifically to poor people.
"Never have, never will," she said.
Funding Education: 'I Feel Very Good About It'
Hargrove and her supporters say the lottery is a viable, seemingly recession-proof way to raise money. In Tennessee, lottery funds are earmarked for college scholarships. An estimated 98 percent of in-state students at the University of Tennessee are on so-called "HOPE" lottery scholarships, something Hargrove is proud of.
"I remember giving a speech in a small town and when the speech was over, the service staff came up to me and said ... 'I just want to thank you,'" Hargrove said. "She started crying and said, 'My son was the first one in my family to go to college and if it had not been for the hope scholarship that would have never happened. I feel very, very good about it.'"
Forty-two states and the District of Columbia have lotteries: Some give all the revenue to education; others use the money for their general fund to build roads or to pay for health care.
Lotteries aren't going anywhere anytime soon. And neither is the woman known as the Michael Jordan of the lottery, who doesn't seem to have retirement in her vocabulary.
"You know, I love life. I love what I do. I am who I am," she said. "I mean, you've spent a day with me. ... There isn't a whole lot of pretense. It just is what it is. Is that over the top? I don't know."
"It energizes the people that I work with," she said. "Some people love it; some people hate it. ... But at the core, I am who I am. I'm comfortable with who I am and I think that's a good thing."
Thanks to helen for the tip.
She is right about 2 things...NO ONE can tell a person how to spend their money and all lottery players are not "poor". In fact, I would say most of them are not "poor".
all the box office receipts across the country were about $9 billion. Music: $20 billion. Salty snacks, pretzels, chips, all that stuff ... about $40 billion. Fifty-five billion dollars of lottery tickets were sold -- $55 billion!"
Tobacco sales which are habitual and rake in billions in tax revenue. They should have mentioned that.
Consumers know what they want to buy. This is still a free country yet for the most part.
I'd definitely recommend clicking that "Watch the Video Report" link. It includes a lot of very interesting info.
"And those states have been more than willing to return the favor. As a state employee in Tennessee, she can make up to $750,000 a year, including bonuses. Last year, she says she made about half a million.
That's three times the governor's salary."
I don't care how good she is, the job should not be a commision type job, should not include bonuses and should not pay more than the Governor. I find that disgusting. I wouldn't want my lottery money going to her and other high paid salaries.
If she wants to make more than the Governor, she should buy a lottery ticket like everyone else.
I certainly hope she doesn't break her arm by patting herself on the back.
Haha.
Nothing like putting herself before the public as potential start up director for the Arkansas Lottery. Show her enough money and she'll be gone.
Well, I ain't mad at her! Good for her!!! If she's good at what she does then she should get paid for it. She's not putting guns to people's heads and forcing them to buy tickets. So what if she brags on herself....men do it all the time!
I agree.
I fail to understand why some people like to control others. If someone of sane mind chooses to spend his money on the lottery, who are we to try and take the lottery from him?? I'm too intoxicated with freedom :-)
I cant seem to open the video on the article :-(
Too bad the article failed to mention how much they raised the tuition in all Tennessee's colleges and universities shortly after the Hope Scholarships began hitting the campii. While I am all in favor of the lottory and fully support the scholarship program, I find my anger directed at the Board of Regents for raising the tuition. Today one must not only qualify for a Hope Scholarship to attend the college of their choice but also apply for education loans. That is totally wrong.
That's the way it works.
If some program or other subsidizes a thing, there is less backlash to raising the price of that thing. After awhile it's even less affordable than before.
This has happened with subsidized tuition, food, healthcare, and housing.
Nice story...I watched it on Nightline a couple of days ago.
Maybe you should read the article again. Apparently, you don't have to buy lottery tickets, so you can see to it that she won't get a dime of your money. I'm skeptical that the lotteries couldn't get the same performance for less money, but her base income is very modest for a chief executive of a company that nets a profit of several hundred million per year, and most of it is based on increasing that profit each year. When the governor reduces the state's annual budget, or at least holds it steady, maybe he should get a fat bonus, too, and will deserve more money than she does.
Playing the lottery, or gambling period, is a chose, As long as its LEGAL
why not.
I know most people here don't like Rebecca-and I have probably said a few wry things myself- but you have to give credit where credit is due: The lady knows marketing! I know people are going to bash me hard for this next statement too, but I think she should get more money than she is getting for her salary. Look at the UT lady Vols' coach's salary. She's earned just as much as her I think. Whe you do what no one else can do, you should get paid for it!
I am against government competing with business in the way of high salaries. If we can get a President for less, everything should proportionally be less down the hierarchy.
You are right about the fact that it is not madatory to buy a lottery ticket - but the lure is too great.
I agree that her salary is within the norm for top lottery directors. She is the fore runner in lottery start ups. Her goal all along has been to make money above and beyond the start up expatiations for the states she worked for and she has accomplished that goal.
I doubt that she will go to the Arkansas lottery as a director because they are trying to set a cap on what the director can earn at $500,000 i think. And i doubt she would accept that amount without stipulations if she took the job and made huge profits that there would be big bonuses for her and her staff.
I'm sure she will read all these.Why has she been to 4 other states then released from them,one state she was fired.Hello everyone wake up,she is a crook and a very good one at that.listen to the video again,She releases all new tickets at the first of each month,to get retired peoples money,she brought out the new Million dollar ticket at the first of February,tax refund checks were filed after the first ....She wanted all of our tax refund money.Well for myself as long as she is in Tennessee I will not play again.I dont see how she can lay down at night and sleep for what she does.I guess I know the answer to my own question,better not say it on here ,I'm more of a woman than she will ever be...
I'm not sure what you mean about government competing against business, but if your skills can get you 100k from one employer or 250k from another, which job would you take? Nobody with the ability to start a state lottery and bring in a few hundred million in the first year is going to do it for 100 or 150k when those skills can earn them much more in the private sector.
OTOH, the ability to get elected President may mean you could earn 10 to 50 times as much in the private sector, but even Bill Gates doesn't have the power or prestige that comes with being President. Realistically, anyone who is capable of being elected President could probably be had for a fraction of the current salary. John Kerry is worth about half a billion dollars and McCain is worth about 100 million (at least as long as they stay married), but they're still working hard for a bit unbder 200k plus benfits.
That said, it sounds like you're behind the times on what the President gets paid. Currently it's 400k, plus a 50k, untaxed expense account. Then there's the free room and board, unlimited medical coverage, and travel perks . Later, there's the killer pension. For only 4 years on the job the current annual pension is 191k, plus reimbursement for staff and office expenses. Bush is now 62, and probably has a life expectancy of about 20 more years. That effectively made his earnings as President about 3 times the salary he was paid while in office.
This is getting too much involved...I am up on what the President gets paid. A salary of $400,000/yr. I don't think ANY other government job should pay more than that. In the order of importance, a lottery job is trivial in comparison. Of course if the person has a choice to take a job that pays more, you take that job. I just don't think any Government job should pay that much. IMHO $100,000 is too much.
We don't need a minimum wage - we need a maximum wage.
However, as I said, this is getting too involved and a different venue would be better for a discussion.
"I'm skeptical that the lotteries couldn't get the same performance for less money, but her base income is very modest for a chief executive of a company that nets a profit of several hundred million per year, and most of it is based on increasing that profit each year."
Hmmmmm, you don't live in Georgia where Paul-Hargrove drove the Georgia Lottery into the ground with her highly expen$$$$$ive ads and ill conceived choice of games did NOT bring revenues up all the while she and her cadre receiving salaries and BONU$E$. The Change Game was on top of the list as obvious greed-based in my opinion ... designed to siphon the last few pennies out of players pockets!!! Her gig was up and sales were way down when she left.
We now have a lottery director, Ms DeFrancisco who knows how to run an immensely successful lottery on far less salary and bonuses. Under her leadership the Georgia Lottery is the best run lottery in the nation.
Contrast between the two is that Paul-Hargrove was a taker from players giving nothing back except lots of expensive PR, wouldn't listen to what players want. Tennessee players does that ring a bell, her way or the highway???
Ms DeFrancisco on the other hand has implemented the Player's Club which mails out buy one get one free ticket offers, she has ongoing contests and bonus buys on tickets. Ms DeFrancisco gives back to players which was rare as hens teeth for Paul-Hargrove.
Ms DeFrancisco is worth her weight in gold as a lottery director and has outperformed circles around anything Paul-Hargrove ever dreamed of in Georgia. KY Floyd you'd have to have experienced both directors to realize the difference between night and bright daylight we have now in the Georgia Lottery.
Like I said before and many times to the lottery players of Tennessee,Mrs.De of Georgia needs to run all states Lottery....The whole Nation Lottery systems,,,she gives back to the people.And this person of Tennessee drains us dry.
"The Change Game was on top of the list as obvious greed-based in myopinion ... designed to siphon the last few pennies out of playerspockets"
And? That's what the lottery is designed to do. If players don't make sensible choices, whose fault is it?
"Her gig was up and sales were way down when she left."
Sounds like a good reason for people in a position that's responsible for the success (or failure) of a business to have their salary structured in a way that rewards them for sucess, but pays more modestly for mediocre performance.
True to form, I noticed that you did not use the generic ones chosen by LP.
Great avatar KY Floyd!
I live in Florida ,was here when mrs hargrove (paul) started the lottery here it maybe all in my mind but when she was here we had a lottery that you could win . The lottery has changed so much since she has left until its not fun to play anymore.She earns the money she gets to run these lotto games, never applied for a job ; ALWAYS RECRUITED. HOPE TO HAVE HER GIVE ME THAT CHECK ONE DAY SOON SOON SOON RITE SOON
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Shh! It's a stealth avatar I'm testing for the defense department.