Jose Cardenas: Thank you for joining us. The Arizona lottery broke sales records for its fifth year in 2012. Arizona received nearly $165 million in net profits. The money supports a wide range of programs in our state. We'll talk to the Arizona lottery executive director about where lottery sales go, but first here's a video that shows some of the programs that benefit from the money.
Announcer: What can we do to make our communities better? How can we solve some of the problems we face? What does it mean to change a life? Since 1981, the Arizona lottery has been offering answers to these very questioning. This support falls into four specific categories. The first is health and public welfare.
Jay: My name is Jay, and I'm a casa volunteer here in the state of Arizona.
Boy: Jay has helped me in every part of my life.
Jay: Casa is a court-appointed special advocate who advocates for children who have no one else to speak for them in court.
Boy: He's one of my top friends. In the world.
Jay: He wants a family, he wants a mom and a dad, normality.
Announcer: Another important area of focus is education.
Wife: My husband was deployed in October of 2009. After he left everything just felt like it sank the hardest thing was trying to figure out a new routine.
Daughter: After he left it just felt like… everything sinked.
Son: I just didn’t really like life at the time.
Wife: The hardest thing was just trying to figure out a new routine.
Woman: When you're a military family, things like the arts really are extra. The Arizona lottery enables 200 military dependents to come to the theater three times a year. This is our way of saying thank you. And we can never say thank you enough.
Announcer: The Arizona lottery is also making an impact on the environment. Here at the Audubon center we connect inner city children with nature.
Girl: Before I came to Audubon I didn't think about the environment.
Woman: I see children discovering a universe that wasn't available to them if this center wasn't here.
Teen: This place teaches you so much. If there wasn't a place like this a lot of people would be missing out.
Announcer: The fourth area of focus is the economy. Or how the Arizona lottery supports business development programs as well as lottery retailers.
Sandy: My name is Sandy Merrill, I'm the agent owner of mosaic insurance in Prescott Valley. We offer all brands of insurance, just about anything any consumer would need. Without this program, I would not have been able to have been an employer right now. They're my assistance I need.
Woman: Because of the funds that came to us from commerce and the lottery, we were able to expand opportunities to 3800 businesses in the Yavapai county area.
Sandy: That was the make or break of my business. And we have been very successful because of it.
Announcer: Thanks to your support, the Arizona lottery has been able to return billions of dollars to state beneficiary and programs. And an average of 3 million more is generated every week to keep vital programs like these in place. So the next time you purchase your favorite ticket, take some time to dream about the cash prize or jackpot. Then think about the countless other winning stories you're bringing to life. The Arizona lottery. With your help, we're changing lives statewide.
Jose Cardenas: Joining me to talk more about where proceeds go is Jeff Hatch-Miller, Arizona lottery executive director. Welcome back. The video gave us a pretty good idea of where the dollars go, and -- But I know there's more to say, and we're going to come back to that. Before we get there, give us an overview of the history of the lottery and how it's organized.
Jeff Hatch-Miller: That's a great question. And it's great to be here with you, thank you for having me here. The lottery was started over 30 years ago by a citizen initiative. There are people in the Arizona that wanted to have a lottery, they liked playing lottery games, and they wanted to find a funding source for a lot of the programs you just heard about. And they started the lottery. So it was started by the vote of the people over 30 years ago.
Jose Cardenas: And there have been a number of occasions when the people have reaffirmed their commitment to lottery. The first time the vote was pretty narrow.
Jeff Hatch-Miller: The first time was narrow, but towards the end 70% or more of the voting public were in support of the lottery.
Jose Cardenas: You're good until 2035 right now?
Jeff Hatch-Miller: Yes. The legislature decided they'd like to keep us around for a while.
Jose Cardenas: You and I were talking a little bit off camera about the impact of the economic recession, and I mentioned I was born and raised in Las Vegas and everybody used to think gambling was recession proof. It's not, but you seem to do fairly well.
Jeff Hatch-Miller: We've done very well. We've been very fortunate. The lottery industry across the country and the gaming industry in Laughlin, Las Vegas, and Atlantic city, all showed a decrease in revenue during that same period of time. So we're very fortunate. Basically I attribute it to the intensity of our mission. It's programs like this that people that work at the lottery have been dedicated to raising money for.
Jose Cardenas: What I think people may not understand is how much effort goes into designing the games, deciding what will sell, what won't sell. Give us an overview of that process.
Jeff Hatch-Miller: You gotta listen to players, meet with them, talk to them, find out what they want out of these games. And once you know that, there's this whole process where we have a small team that works with vendors around the country that specializes in these products, and we find out what are the best tickets, the ones with the most interesting play style, and lately in the last few years have been adding more prizes, a lot more bigger prizes.
Jose Cardenas: Scratch tickets tend to be the most popular, right?
Jeff Hatch-Miller: They're about two-thirds of our business.
Jose Cardenas: The phenomenon that we witnessed over the last particular years in particular with the big lotto jackpots and the Powerball and stuff, whereas the fever grow, people start spending more money.
Jeff Hatch-Miller: When we got up to $587 million just a few weeks ago, really, it was amazing. Almost everybody I know was talking about it. And most of the people were playing except myself and my team because we're barred from playing.
Jose Cardenas: Certainly barred from winning. It wouldn't do any good to play. Let's talk a little bit about the benefits to the state and one in particular, we talked about the economic downturn. The lottery helped bail Arizona out of that big huge deficit we were facing a couple years ago.
Jeff Hatch-Miller: Yes. The state had a shortfall in the state budget, they just didn't have the money to pay all the bills. And they turned to the lottery because we had a creditworthiness to borrow money on the state's behalf. We borrowed $450 million, which we're paying off over 20 years with lottery proceeds.
Jose Cardenas: Now, we talked in the introduction about 165 million dollars in profits. But for the lottery, profits means that's the amount of money that goes to these programs, some of which we saw in the video.
Jeff Hatch-Miller: 100% of the monies the lottery has left over after expenses go to the programs you heard about. So it's really not profit, it's just a generation of revenue for those programs; it's always been part of the lottery operation.
Jose Cardenas: Those expenses we're talking about include, what, 62% that goes back to the people who buy -- Play the games.
Jeff Hatch-Miller: On the average about 62, 64% of the money goes back to players. And then another amount goes to the people that sell the tickets and provide all the equipment you see in retail stores. Then a very, very small amount, about 3% goes to the people that run the lottery, the -- My staff, our equipment, our cars, things like that.
Jose Cardenas: The -- By statute the monies are distributed in a particular fashion to the beneficiaries. But you and your people kind of keep track of how the dollars are being used.
Jeff Hatch-Miller: Well, we're really motivated by who these beneficiaries are. When we see Michael, the young man in the video with the red hair, and Jay, who is an ex-FBI agent who works with him, a voice for him, really, this is a young kid who got caught up in foster care system for a number of years, he's still in it, and his family was gone, and he needed a voice for him. And here's this man, an ex-FBI agent, is volunteering with a court-appointed special advocate program to help this young man out and provide a voice for him in court, at school, in the community, and also play football with him and have some fun with him.
Jose Cardenas: One of the segments we also saw was Gammage and the director there, how does the lottery benefit the arts and culture?
Jeff Hatch-Miller: Well, we support Gammage in terms of that program that you heard about for military personnel and their families. We find that military personnel are struggling sometimes financially, and they don't have money left over for the extras by going to Gammage that you and I might be able to enjoy. So we provide a sponsorship for 200 people, the military personnel and their families to go to programs, they're very special programs backstage tours, meeting with the talent and the people that are putting on the show. And a real special seat at the event.
Jose Cardenas: So I know that the Hispanics probably participate in the lottery about the same rate as most other groups, but there are some special efforts that the lottery is making with regard to that community. Tell us about that.
Jeff Hatch-Miller: We try to communicate with everybody in the state. Obviously the Hispanic population has been and is an important part of that. And we try to shape our messaging to communicate effectively and appropriately with Hispanics and with others as well.
Jose Cardenas: Jeff, we're almost out of time. Where do you see the lottery going in the future? You're constantly coming up with new games, experimenting with what would sell better, but is there kind of an overarching vision that you see coming about?
Jeff Hatch-Miller: Well, people like to play these games where something becomes exposed and you have to guess what that would be, or guess a number, and the number comes up. They've been doing that for thousands of years. We're going to stay in that business, we're going to provide similar products that we have now, but you'll find they can become more high-tech, more exciting, to a new audience. On your mobile phone, won't be able to buy the tickets on the mobile phone, but it will be an enhanced experience through that or your computer.
Jose Cardenas: And just give me a sense for how that would work.
Jeff Hatch-Miller: People right now get all the winning numbers pretty much on their computers or over their mobile phones. They also come and learn a lot about the lottery. Everything that you heard in the video today, that's on our website, and someone could go to AZlottery.com and find out about who the beneficiaries are, and how much money we made last year and what the odds are on any of the games. It's a way to augment the experience for the player to know more about us. And we have a big following on Facebook and on twitter, and we interact with players all the time, put on special contests for them, and make it more fun. It adds that extra dimension.
Jose Cardenas: It sounds like a lot of exciting things coming. We're grateful for you for joining us on "Horizonte."
Jeff Hatch-Miller: My great honor. Thank you so much.