The Achieve Podcast - Alec Thomson (Arizona Lottery)

Welcome to another episode of the Achieve Podcast, the show where we highlight leaders, creators, and entrepreneurs, those who are building meaningful businesses, shaping their industries, and having an impact. I'm Taylor Baker Baker, your host, and excited today to be joined by Alec Thomas, and the CEO of Arizona Lottery. You can go to arizonalottery.com. Alec, first, thank you for joining us today.

Yeah, thanks for having me.

And so give us the backstory a little bit on how you got into this space, into this niche that you're in, because it is a bit of a niche and not one a lot of people think about.

Yeah, no, exactly. You know, it's funny you say that because I think, you know, coming into this role, it's definitely one of those things that crosses your mind of, you know, I would have never dreamed of being the director of the Arizona Lottery, right? But You know, I think for my story, it was just the right progression of events, the right series of experiences in my professional career that led me to this point. You know, I've spent most of my career in political type roles serving elected officials at the state and local level on both sides of the aisle. And, you know, doing a variety of different types of jobs from community engagement to statewide campaigns to community development type work. And then also had, before this role, I had a stint in the private sector working for an advertising agency based in Arizona. And so when Governor Hobbs was elected, she, you know, asked me to take on this role. And so I serve the governor as part of her cabinet and also as CEO of the Arizona Lottery. And so Yeah, it's been great. You know, I think it really allows me to harness my business background, my marketing background, and then, you know, of course, just kind of that still hold on to that positive change that we're driving for Arizona to build a stronger Arizona for tomorrow.

That's awesome. Now, how big is the team and organization that you're over with this?

Yeah, so we have a— the Arizona Lottery is built on kind of a public-private partnership, right? So Our operation is driven by both state employees as well as our very important vendor partners that, you know, keep everything moving and keep everything secure and our retailers happy out in the field, that kind of thing. We have about 160 folks on our team. Wow. And those are folks that are located statewide. We have people out in the field. We have people here in our headquarters in Phoenix. We have an office in Tucson and Kingman, so it's a pretty large-scale operation, you know, for what we do.

Wow, that is impressive. Now, what would you say has been driving the growth for the organization, for the lottery, these days?

Yeah, great question. You know, I think lottery is in an interesting spot just on a global and national scale with just the kind of larger overall gaming industry expansion, right? When you look at sports betting, you know, new casinos being built, etc. And so, you know, in Arizona, we are limited to traditional lottery sales based on the 2021 gaming compact. And so what we've done though is, you know, kind of own that. We're of course innovating where we can. We're engaging players through through digital means, but we're, we're really focused on building that core of the business because that's what we can focus on right now. And so we've done a lot of things to optimize how we're working out in the field, how we're supporting our retailers, really honing in on the core of the business. About 70% of our revenue comes from scratch tickets, 30% roughly comes from draw games, So, you know, we looked at that and we said, this is, this is the core of our business. What can we do to keep players engaged in these products to make sure that the player experience is seamless and easy and exciting? But then also, how can we set ourselves up for success in the future should we ever have the opportunity to sell our products online and, you know, to also engage that next demographic not only in what might come one day, but also in what we have today. So making sure that we're getting that next generation of players engaged in what we sell. Wow.

Now, what would you say for you, what turning points had the greatest impact on how you think about and run the organization?

You know, I think I came in with kind of a non-gaming perspective. You know, I mean, I had my marketing background, I have my kind of government background. And so I really looked at the operation and said, all right, what, what can we be doing to act? You know, yes, we are a public enterprise. We are a state-owned enterprise. But how can we operate more like a business? How can we approach our interactions with our corporate retail partners, with our independent retailers, a lot like other big brands do, right? You know, when we go out in the field, we want our retailers to want to sell our product, to understand our product, to be excited about what it offers their customers. And so we've really kind of turned what I saw as kind of an outdated model for selling lottery on its head, and it's working. And so that's, that's, that's what's really helping to drive some of that growth. You know, the other thing is how can we be a little bit more creative in some of these scratch products? We've done some really interesting stuff with— in partnerships with both licensed properties, you know, things like Godzilla, for example. That's one that we're looking at right now. But also, how can we look to our community and partner with local brands to really celebrate what's happening here in Arizona, but also to get folks engaged who are connected to these brands? State 48 is a great example. We're driving meaningful impact with them from their cause, but also helping them build that brand too. You know, Habitat for Humanity, we were partnering with them not necessarily on a scratch ticket, but on some of our community impact work. So kind of reimagined how do we partner with global, national, local brands, um, to engage a new kind of, uh, player.

Okay, now this next part's kind of a two-part question. When it comes to your messaging, your outreach, your marketing systems, what have you found that's been working well to attract and retain clients and customers?

Yeah, you know, I think all of that traditional type of marketing still matters. TV still matters, out-of-home still matters. You know, digital, of course, is a great way to engage people directly where they are. And so that's a big piece of what we're doing. But, you know, I kind of mentioned these brand partnership things that this is also a big part of how we're evolving that marketing strategy. We're using, you know, experiential type promotions to engage both our current players and also attract new players. That would include things like a million-dollar getaway to Hawaii, you know, these experiences that you can only get by playing lottery. So we're using our marketing strategy to take the lottery experience beyond the ticket. We want you to feel like you're still getting something from that experience well after the ticket is scratched, well after the draw happens. And so, you know, that's, that's kind of a big piece of how we're shifting. You mentioned AI earlier, and, you know, that's actually something we're looking at a lot right now, right? This becomes increasingly important, I think, in terms of staying relevant to make sure that we're optimizing how we're showing up on AI. And so we're doing some really interesting work. Actually, this is kind of a new thing that we've just started the conversations with some of our advertising partners on is what is that strategy for us? And, you know, they admittedly said, we're learning too, but let's learn together and let's figure out how we can help AI learn about your brand, how we can, you know, engage customers through that platform because increasingly, I'm sure you can relate to this, we're all going to AI for answers that we want, for the ideas that we're seeking. So that's, that's something I'm really excited about. Wow. Yeah.

So I'll finish one more question, then I'd love to move more into the AI aspect of it. When it comes to your sales and marketing, where do you feel like there's still opportunity and/or money on the table?

Great question. You know, we in the lottery culture in kind of the West, Western part of the United States is a little bit more scratch heavy. We're— we've been looking at how do we expand our footprint in more social environments, right? So we want to look at those products, those games that we can sell in, you know, more of a bar-type setting. This is something that you see a lot more on the East Coast. You know, kinos, really popular back East. You know, other kinds of monitor-based games are a lot more popular back East. And so we're trying to look at how can we get some of those, what I call non-traditional retailers, more engaged in our products. Pull tabs are having a moment right now. We've seen really big growth in the pull tab category. So that's those little, you know, part— they're like little cardboard you pull the back off and then you have, you know, if you get a match, you, you win, right? Lower tier prizes, but a really fun thing to do at a bar when you're with your friends. You buy a round of drinks right after you win, something like that. So that's one thing that I think we're really looking at expansion in. And then of course, you know, going online is always the ultimate goal because we know that there is money on the table when it goes to selling our products online. But, you know, current policy doesn't allow for that. So In the interim, we'll stay focused on, on those traditional products and keep growing there.

Wow, that's amazing. A lot of potential. So going, going further with the AI and automation, where have you guys found ways to utilize it internally?

You know, we are, um, exploring all of that, I think, as everyone is every day. And, and, you know, what I've really challenged my entire staff on is, um, How can you apply? How can you use these tools every day? You know, do something to learn this every day, um, you know, with caution, right? And so that's the message right now is, is that fine balance between exploration, um, you know, and, and, and also, you know, making sure that you understand it because it's just such a new tool to everyone. I even struggle sometimes, you know, remembering to work it into my workflows, right? To remind myself, hey, I can save 20 minutes by, by running this through AI versus sitting here an extra 10 editing it. So it's, it's that, it's as simple as that, just the daily work of every person on our team. But also we're looking at, you know, how do we automate some processes in our customer service division, you know, processing claims. Processing, you know, customer feedback, responding to customer feedback. We've done some interesting stuff using AI to optimize our sales routes. So we've been able to cut— and I don't have the number in front of me— but a significant amount of miles driven on the road by every one of our territory managers, which is a really big deal because not only is that supporting environmental, you know, just like environmental responsibilities, but also, yeah, it's making people happier. It's making— giving more time to spend with the actual retailer. So across the board, and that's made possible by AI constantly evaluating, is this the best route? I got— I'm trying to think of a few other ones. We're looking at some suggestive selling that would be included in our— on our vending machines. This is a new tool that we're exploring right now. So when you go to the vending machine, if you're a crossword player, you might be interested in X product, right? And so that's another, that's another thing that we're looking at pretty closely. And then I mentioned AI. That's the one I'm just, you know, as a marketer, it's one that I'm personally very excited about, not just because of my own interest, but also because I think it's going to have some major impact for us.

Wow, I can see that for sure. Now, if you had to pick one constraint, Alec, to focus on and solve over the next 90 days that could change the trajectory of the business model, what would it be?

Oh, that's a, that's a hard question. Um, over the next 90 days, well, I, you know, I'll tell you what would change the trajectory of the business, and that would be if we were able to sell our products in lineup. I keep going back to that, but You know, that is the natural evolution of the lottery. And but, you know, I will say that is very unlikely to happen in the next 90 days, although I will continue reminding folks of the value it could add to our state and our organization. But, you know, I think, I think just, you know, we're, we are in a year, fiscal year '26 will be a good one for us. We have benefited from some large jackpots on the draw game, in the draw game category. We have really done incredible work to optimize our operations on the scratch side, and I think we're going to break some records and I'm really excited about it. You know, knock on wood, we're not quite there yet. We got a full 2 months left. So I am going to stay focused on breaking those records so that we can deliver record-breaking impact for the state of Arizona in 2026. And that is what we'll stay focused on for the next 90 days.

I love that. So when you look back at your own journey, the wins and mistakes, what lessons stand out to you? And maybe what are some that took longer to learn than they probably should have?

Mm. You know, I've been fortunate to work for some very, very talented leaders and people. Throughout my career that have taught me so much about just leadership and, you know, both how to lead and how maybe I don't want to lead. And so I think, you know, it's, it's a— I was actually just having this conversation with a colleague of mine recently about, you know, they were expressing, sharing a story about someone who messed up on their team and how they had so much anxiety about it, whatever. And I was like, you know, those are the moments you learn the most from. I remember I sent out I, I approved a letter, a very formal letter at one point in my career, and it had a very bad mistake in it. And that was one of the greatest lessons of my career because I was just so mortified by that mistake that I had made. And I was working for a very tough leader who is exceptional at what they do. But they reminded me that, you know, the details matter. And so I think, um, I think it's those— I guess my point is kind of some— sometimes those learning opportunities are what set you up to really, um, to really care and be thoughtful and slow down and, um, you know, know that mistakes happen, but you have to own them and you have to do the work to fix them. And so, you know, that's one that I think about, you know, almost every day, whether it's someone who's reporting to me or a mistake that I have made. You know, I think also just leading by example is always one of the most important things, right? We can preach and preach and preach, but if we don't actually demonstrate what we're expecting, then we can't hold anyone accountable. I have a big project happening in the office today. I don't really have a role in it, but I'm here to support the team. And, um, and, you know, I think it's things like that that really go a long way in positions of leadership.

So true, so true. And those learning opportunities, often the failure are the ones that stick with us the most because we get the most out of it.

Wow.

So last question for you then. When you think about the next stages of the business and organization, what are you most excited about?

You know, I'm excited to deliver record-breaking revenue for the state of Arizona this year, and I am also excited to continue advocating for the modernization of this organization. I think that we add so much value. I mean, the lottery has been investing in Arizona communities for 45 years this year. And, you know, I think I can see those results in a really tangible way. And I'm just excited to continue evolving the organization, optimizing the organization so that we can deliver for Arizonans, because that's what they chart— that is the mission they charged us with in 1981. And we're, we're growing. We're one of the fastest growing lotteries in the country. And keeping on that trajectory, I think, is one of my biggest goals.

I love that. That is impressive. It's— I don't think a lot of people miss that element of how much it gives back to the community.

Absolutely. Yeah. Yeah.

So for those who want to learn more, again, arizonalottery.com, LinkedIn. Where else can they go to learn more if they want to be a participant? They want to help be part of the team?

I mean, yeah, I think arizonalottery.com to learn more about the organization and what we're doing for the state of Arizona. And also just visit one of our, you know, 3,600 retailers located statewide. And, you know, for those 21 and over, get engaged in our products, you know, learn more and be part of the impact that we're driving for Arizona. Because first of all, you can't win if you don't play. But, you know, if you— I kind of like to add on, if you don't win, then your community does. So come check us out. Come get in on the fun and excitement and positive impact. I love that.

So be intentional with that. Again, thank you for joining us, and thank you to our sponsors of today's episode, Achieve Fractional, which provides fractional executive leadership for growing businesses. And if you enjoyed the episode, share it with a friend, with a colleague, with an enthusiast. Like, it's a fun game. Get out there, and again, you win one way or the other. The community benefits, or you benefit personally. So Reach out to Alec and the team, and we will see you all in the next episode of the Achieve Podcast.