Steve (00:00.298)
If you will, is there anything on your mind today that is like in the world of sponsorship, in any capacity of sponsorship?

Steve (00:16.14)
anything that's on top of your mind, that's exciting you, that you're doing that's new that you feel is cutting edge that you want to share that I'd be remiss not to capture.

Josh Whiteside (00:30.958)
Yeah, you know, I think for us, you know, dealing with University of South Carolina and University of Clemson in the Palmetto series that we have, that deal is, it's a unique deal, right? We have some cool assets and things.

Steve (00:44.62)
That's important.

Josh Whiteside (00:48.078)
Yeah, that's important. And then the other thing that I think is interesting in the facets of dealing with college athletics is NIL, right? And we don't get involved too much here on the lottery side from NIL, but from a partner standpoint, we are seeing the effects of those asks from the university to make up all this revenue sharing money.

Steve (01:15.65)
So this is your relationship with the university?

Josh Whiteside (01:18.776)
Yeah, you know, we just we've just gone through actually last two weeks ago, our discussions for next fiscal for our sponsorships, you know, and there are they're trying to make up almost $20 million of revenue now that they have to share with the athletes. So of course, they're going to pass that over to partners, offer new assets, etc. And so we have to manage those expectations from our side.

Steve (01:44.462)
That's something that's important. Excellent. Okay. And I'll just make sure I've got your right title, which is its chief marketing officer of the SCEL, South Carolina Education Lottery. Good. Good. So this is very free flowing, Josh. As you know, it's not live. And it'd be really adorable if we've already been 15 minutes live on air. And we were the number one show.

Josh Whiteside (01:57.562)
That's right. That's right.

Josh Whiteside (02:08.814)
Yeah.

Steve (02:14.38)
how to resolve technical issues. so good. So why don't we, I'll do an intro and we're gonna just kinda.

find our way we're just going to float through okay great so okay

Josh Whiteside (02:29.178)
Perfect. Yeah.

Steve (02:39.714)
Josh Whitehead is in studio today. Well, actually, Josh Whitehead is not in studio. One sec, please. You feel like you're in studio, but you're not. Give me a second.

Josh Whiteside (02:53.927)
It's in its white side, by the way.

Steve (02:56.62)
White side. Thank you.

Josh Whiteside (02:58.052)
Yeah. Yep.

Steve (03:01.72)
kind of a Luke Skywalker antithetical, come to the white side. There you go, I like that. Okay.

Josh Whiteside (03:08.57)
Yeah, there you go.

Steve (03:14.734)
So joining us today on the transaction report is the chief marketing officer of the South Carolina Education Lottery. His name is Josh Whitesed.

Steve (03:37.324)
His name is Josh Whiteside and he joins us from South Carolina. Josh, this will be perhaps in my multiple decades of being in the media industry, perhaps one of the more unique discussions on sponsorship and what a pleasure it is to have you on the Transaction Report today.

Josh Whiteside (03:58.766)
Well, Steve, I appreciate you having me and I'm looking forward to our discussion today.

Steve (04:03.382)
Me too, actually, because when you think about it, it's really interesting to think about an instrument in America that when I was a boy was virtually non-existent and has become such a powerhouse of a tool that you have states, as I understand it, at least 45 different institutions that oversee lotteries throughout the United States.

that we have today, if I remember correctly, a per capita spend on lottery spend as of 2022, I think was around 300 plus dollars if I have my numbers correct. And I don't know if that resonates with you as a number top of mine, but I believe it was literally 300 plus dollars per American. And in Massachusetts, by the way, the number is over a thousand dollars per.

resident in Massachusetts for which money is spent on lotteries. First and foremost, let's get into a definition. What is a lottery?

Josh Whiteside (05:15.812)
Yeah, you know, for us, a lottery is we are a quasi state agency. So when I say quasi state, there are some things that we follow state guidelines for that other state entities do. And there's other times we don't because we are not taking appropriations from the state, right? We hand over funds to the state every year. And so that's where it becomes a little bit more more of a business per se than most state agencies. And so for us, yeah, go

Steve (05:43.63)
What I'm going to interject and just make sure I understand is, just as we go through this and for our viewers, just to make sure that last comment, we don't take, you mentioned, appropriations from the state. And that sounds, as you said, distinct and unique. Can you give us, in just simple terms, what does it mean to take appropriations from the state?

Josh Whiteside (06:04.612)
Yeah, so every year the state, you they have to run their budget and they have so many dollars to use for the budget and they allocate funds per state agency, right? So there are multiple state agencies in every different state and they get funds from the state every year. Well, the state does not give us funds to run our business, right? We actually turn over funds to the state every year to help them really. And our money goes to education, higher education.

So we actually, it's sort of a reverse program here where we're not taking money from them or giving them money where, you know, like Department of Transportation, they're allocated a certain amount of money every year from the state and then they have to take that money and budget that correctly. And so we're a little bit different in that

Steve (06:50.638)
So when you look at lotteries around other states throughout the United States, would you suggest that the majority are taking money from their own state?

Josh Whiteside (07:00.11)
Yes. Yeah, because the amount of money that we deal with in a typical year is in the billions of dollars, right? And so there's not many outside of maybe revenue that's generating billions of dollars of revenue that we would have to ask for anything from the state. so like specifically in South Carolina and all states are different, but for the most part, you know, last year we did

a little over $2 billion in sales, right? And a quarter of that goes back to the state. And so that's a lot of money. So we don't have to ask them for anything. run our organization like a private business. We have all the departments that typically other business would see. And so when we go to the state, we're telling them how much money we're going to give them, not how much money they're going to give us.

Steve (07:54.606)
Hmm. Are you obligated to give them that money? In other words, is there something in your charter to have the right to do this lotto that gives the state that type of money?

Josh Whiteside (08:05.22)
Yes.

Josh Whiteside (08:09.038)
Yeah, it's actually written into law. So the lottery here in South Carolina passed in 2002. So we're about 22, 23 years old. And in that, we have to turn over all net proceeds to the state. We give those to our legislate, we get that money to our legislation, and then our legislators sort of divvy that out within the education bucket here in the state of South Carolina, mostly to fund.

scholarships for higher education, the Life, the Hope and the Palmetto Fellows. And there's a couple small ancillary ones and then there's also some K through 12 money that happens. And so once we turn that money over to them, that money moves on.

Steve (08:49.624)
So just to break down again for our viewers, we've got a total pot, if you will, of about 2.4 billion in ticket sales. So these are people going into mom and pop shops, and forgive me for not being an expert on where lotto tickets are found, but I gather gas stations, places where staple products are traditionally needed, routine visits take place, opportunity to have fast...

exercising of transaction. So the ability to speedily move through where you're going to find that individual showing up quite often. It's not once a month where that person might be showing up to buy a ticket. It's really the frequent locations that we as human beings engage.

And with that, your ticket sales, as we call them, amounted to, as we understand it, last year, approximately $2.4 billion. You took $592 million, and that went toward your education, for which the fund you have has literally helped since 2000, over 350,000 students, which, please.

Josh Whiteside (10:05.968)
It's actually happened, I'll correct you on that number. It's way bigger than that. That's about it. Yeah, it's way bigger than that. like we have, we have funded $8.7 billion to education since 2002. And so that funds scholarships every year to every university in the state of South Carolina. As long as you've met certain qualifications coming out of high school, you've kept your GPA up, you'll continually get the life scholarship.

the smartest of the smork at the Palmetto Fellow Scholarship. And so that equates to the life's about 5,000 a year. Palmetto Fellows is about 7,500 a year. And so it's a big, big number.

Steve (10:47.702)
And how many universities are there? know Clemson is a big one in South Carolina, University of South Carolina, the Gamecocks are another. How many cumulative universities do you find?

Josh Whiteside (10:58.352)
you got me on that one. There's definitely, there's quite a bit, you know, in South Carolina, we're a small state. We're almost 5 million people in our state, right? There's probably 20 or 30 universities and schools around the state, right?

Steve (11:13.672)
So that's 592 million. Is it mostly higher education? Is it almost exclusively the higher education realm?

Josh Whiteside (11:18.447)
Yep. Yeah.

Josh Whiteside (11:22.32)
Yeah, and so there's a number that the legislation puts out there. So they take that money and it goes to these scholarships. But a portion of that gets earmarked for K through 12 programs like school blushes, gyms, computers, know, those sort of things to help out otherwise.

Steve (11:39.17)
Within that budget, by the way, just as we talk about scholarships, and just as we're talking about the two schools you mentioned as being division one, NCAA teams, do some of these go towards sports scholarships?

Josh Whiteside (11:51.386)
So, not specifically, it has nothing to do with sports. What it does is it's on academics only, right? So if a student coming out of high school has a certain GPA, a certain ACT and SAT score, and also class rank, that sort of earmarks them automatically for these scholarships. So as soon as they, them or their parents fill out their FAFSA form,

that money is going to be attributed to a scholarship. If they happen to be an athlete, that's extra money for them.

Steve (12:25.838)
So again, of the 2.4 billion, about 600 million going to this education fund, helping way more than since your inception with the 8 billion that's been channeled to this education fund, which is just an astronomical amount of money. When you think about it, for folk who very often are coming in and buying a dollar ticket for $2, $3 lotto ticket or whatever that amount is,

And then you have payouts of the 2.4 billion. You have just about 60 % of that money, 1.6 billion going to the winners of your lotto.

I gather that's on a daily basis. There are different levels of lotto and how those numbers accrue and daily payouts and then certain winners that could be hundreds of millions of dollars because people just each day keep on buying and no one has won that particular draw. And then I understand which is perhaps for my colleagues and me, one of the more fascinating stats. That of your $2.4 billion,

that you did in sales, 0.5 % was spent on advertising and marketing and sponsorship. So by our math, that's about, if you will, about a $12 million spend that you've allocated from your gross sales, which is quite remarkable if you think that if the average Fortune 500 brand,

could only spend 0.5 % of gross sales on advertising. That would be considered revolutionary, at least to my knowledge.

Steve (14:10.702)
First and foremost, are you mandated for any reason to keep it to that low, low, low point? Is it such a endeavor for people that it's such a lifestyle for the average American, which I'm learning, and I have to tell you, I've learned so much in such a short period of time. When I saw the stat from Massachusetts that of 7 million population,

per capita there are over a thousand bucks per per individual, 1037 dollars actually per capita in in in Massachusetts, whereas in North Dakota the lowest spending state on lotto is about 47 dollars per capita. Is it just

such a lifestyle purchase for people that you just don't have to advertise or how to out of 2.4 billion you've made that decision to cap it at 12 million.

Josh Whiteside (15:09.776)
Well, I want to first commend you on your research because you have, you have nailed a lot of these facts and figures and trying to figure out the lottery. So great job on that. Steve, that was, that was really good. And there was a lot there. So I'm gonna try to try to break it down. So all of those numbers you talked about in South Carolina, we're a cash only state. So you can only buy lottery product with cash. So you have to walk into gas station grocery store.

retailer and pay for lottery with dollar bills. You cannot use a debit card or a credit card. Some states can. We do not. We're hoping that that legislation passes this year that we can increase our sales in the future, but we're a cash only state.

Steve (15:56.722)
Was that just to process that? Was that because more of a safeguard to protect the human from himself or herself by virtue of that if I come in with a card, I could just literally go into debt really fast? Because I'm, it's just, I have technically nearly unlimited spend or certainly way beyond my desired spend per se.

If I'm in the mindset at the moment that I really want to win and I've got that whatever chemical I'm secreting, dopamine or otherwise, kicking in, is that a safeguard against who we are as humans to protect us from overspending on our credit card?

Josh Whiteside (16:39.088)
So I think in 2002, you know, we're, in the South and we take things a little slower sometimes. Obviously our Northern partners with other lotteries have been around for quite a while. And when the lottery bill passed in 2002, it only passed by two votes. So there wasn't a big, it wasn't something that everybody wanted. And, and one of those things to help.

the discussion down here was we will be cash only. We will not do debit cards. We will not do credit cards. And it is to, I think initially was to sort of safeguard people into overspending on product because it was so new and fresh, right? So it's taken us 22 plus years now and there is a bill moving through legislation currently that really hoping by the end of our fiscal year, we have it approved and we can start accepting debit cards as we are one of the last.

in the United States that is a cash-only state.

Steve (17:37.294)
You mentioned something really interesting, Josh. You said that the legislators benefit or distribute the funds to the educational institutions and that's the benefit the state gets. But there is another very sizable benefit and that benefit comes from me asking you the following question. What percent of your winners are actually in-state residents?

And does my acquisition of a ticket and winning within South Carolina obligate me to pay taxes in that state? Or do I have, I'm from North Carolina and I was visiting a friend in South Carolina and I win a big lotto in South Carolina, where do my tax obligations reside?

Josh Whiteside (18:26.288)
Great. So first off, I'm not a tax professional, but I will say, no tax advice here, right? But I will say, for us, it's hard to track because we're cash only, right? It's hard to track who our consumer is. And that's a challenge we've had for 20 plus years when we don't know who that consumer is. Now, we've gotten a little bit.

Steve (18:30.51)
You dress like that, that's all.

Steve (18:48.098)
Now you can't go into the, you know, it's been around for a while and I don't want to bring up a sad point, but during the Boston bombing, one of my family members married into the family. His father was the one that Facebook acquired his company out of Israel where they were able to detect that little sack that was deposited at the Boston bombing and then brought it back to the brothers who had placed it rapidly, instantaneously. Just a quick query.

We're not able to go into the closed camera that's in a mom and pop shop. And literally every time someone is transacting a lot of purchase and get that demographic and use AI today to actually then output for us our demographic, clear demographic.

Josh Whiteside (19:36.26)
So the other thing in South Carolina is we have anonymity, right? And so when you win anything in South Carolina, you don't have to tell anybody. so, yep, nobody knows.

Steve (19:44.686)
Wait, wait, so the guy wins 50 million bucks and it's, it's Jack, what's the biggest jackpot you ever had?

Josh Whiteside (19:51.322)
So in 2018, so I started here in 2018, I think week three for me, week two, we hit the Mega Millions jackpot for $1.5 billion. And so I was put right into that fire of, we now have a jackpot winner, one largest jackpots ever. nobody knew it. It was one winner and it was a small town in Simpsonville, South Carolina, right outside of Greenville.

Steve (20:13.794)
How many winners?

Josh Whiteside (20:19.984)
And nobody knows who that person is. We do know that that person is a female. And that's about it. Now to go back to your question about, you know, CCTV. Yeah. Yeah. Yeah.

Steve (20:28.91)
Wait, wait, if you don't mind me asking, I just, I don't, and again, I'm not here to interject all that, but it's too interesting. You're telling me you, as the owners of the lottery, didn't know who the recipient was of the 1.5 bill?

Josh Whiteside (20:36.496)
Ahem.

Josh Whiteside (20:43.674)
So there's three or four people that do, right? Because when that person makes that claim, they have to come to our office and then they are going to have to fill out a claim form. They're going to have to wire, get that money wired to their account. So the head of our security, our executive director and our CFO are the only people that know from our organization and actually in our general counsel. Yeah.

Steve (21:07.362)
And then on bank on the other side, the person's bank would certainly know that a big chunk of change came in from a wire. And then you have taxes. That was my follow-up point, that this money now gets distributed back to your state in the form of taxes. And that gets literally divvied out to the state before the winner ever sees those proceeds.

Josh Whiteside (21:14.223)
Ahem.

Yeah, yeah, yeah.

Josh Whiteside (21:33.422)
Yeah, so that one was, it was a lot of money. It was a couple hundred million dollars in taxes that generated that one win. So as soon as she claimed that money, that tax generation happened and then the state came into a windfall of quite a few hundred millions of dollars, which was great for our state because as you stated earlier, about 60-ish.

percent or so, 65 % of our money goes back to the winner. So it goes back to our state. And now I can't tell you that everybody that wins in South Carolina is from our state because we do have Georgia and North Carolina that border us and people cross the border all the time. But most of that money is coming back here. And so it's not only benefiting the kids when scholarships, but it's also benefiting our residents and our players. Right. And so there's it's a win win situation here that I think a lot of people forget about.

when you're talking lottery, is there's a lot of money that's moving around here in the state because of us.

Steve (22:36.152)
So I want to go again before we get into your personal background and with our viewers, many who have a strong background in sponsorship. I want to look at one other thing. In that 12 million, does that also include appropriations to invest your funds wisely? There's a...

a toll free number for you with your feeling that you're a little too zealous in your acquisition of lotto tickets. Let us help you overcome that perhaps proclivity to spend too much of your discretionary funds on lottery tickets. Is that also included within the 12 million?

Josh Whiteside (23:18.768)
Yes, that's a great point. I'll go back to your before I answer that question, go back to your percent of budget that we use, right? We use about a half percent of our of our overall sales every year. And so we're not mandated to use a half percent. We're actually mandated to not use any more than two percent. We take a lot of pride and not even coming close to that. that 10 to 12 million dollars we spend in advertising and sponsorships every year is so far below what we're allowed to spend. Right. But we.

What we try to do is we're a very fiscally responsible state and state lottery, and we try to make every dollar count. So every $5,000 we do not use, that funds a life scholarship in the state of South Carolina. And so, you know, we have an agency of record here in town, and they help us with our media buy and have for a while. And so they make sure that we are very...

efficient in our digital billboard spend, our TV advertising buy, our radio buy. And so, you we are a small state. So it doesn't take a hundred million dollars to cover the state. Right? We can do it fiscally responsible and in a very efficient manner. You know, we're also on gas station TV stuff. So like we're all over the place and I think we do a really good job of it. and then we also have sponsorship built into that. And so, you know, we

I think we do a really good job at managing that budget and keeping those dollars low so the money goes back to the state of South Carolina.

Steve (24:51.47)
with your background. So now comes the hot topic of the day. So here's a gentleman, ladies and gentlemen, our dear viewers. Comes from the Charlotte Hornets five years prior to joining the lottery, the South Carolina Education Lottery. You were the director and later senior director of creative for the Hornets. You also worked at Dunlop.

You're a dick sporting goods, pure fishing. You have a lot of sports background. So then the question is, first and foremost, is it very tempting for you if you're a, let's just call it a 12 million spend at the half a percent. If you've got 4X that you could be virtually 50 million spend, you have a lot of bandwidth open legally.

to be able to walk into the sandbox of lots of significant sports events at perhaps even a higher profile than you are today. So with a sports hat that you wear and that's been your legacy, how do you approach this having come out of a sports marketing background when you have such an inordinate amount of money that's being allocated to promote what you're doing?

and with the options you have in state from golf with the heritage to the universities, and obviously all your proteins, how do you navigate that and how do you ultimately make your decisions on where that 12 million, which includes linear placement, streaming, programmatic, as you said, in gas station, video, other points of sale activity.

It doesn't leave you a whole massive amount of money to play in the sponsorship world. So how do you navigate that again with your sports marketing cap and make those fundamental decisions of where to appropriate those funds that could be again up to 50 million, but today stand at 12 million.

Josh Whiteside (27:04.216)
Yeah, you know, it's, it's interesting. Coming from the sports world, you know, I was in the CPG world for a while there with Dunlop and Dix and, but also kind of playing a little bit in, the athlete world. You know, when I got into, I moved over to the Hornets, you know, it's I'm on the other side. I was on the other side of sponsorship, right? When you're there, you're, when I was on the Hornet side, it's how can we find brands like the lottery to invest in what the Hornets are doing to

you know, make it work for both of us as a partner. And now that I'm on this side of the business where I'm sitting down with, you know, my former teammates, other, you know, the universities and their sponsorship people and having that understanding of how sort of the backend works on the sports side. helps me negotiate a little bit better to make sure that that dollar that I'm spending, I'm getting all the value out of it that I can. And so in the state of South Carolina,

We have zero professional sports, right? We don't have an MLB and NFL and NHL team here, but we have all college athletics and a lot of minor league sports. so that kind of helps that discussion when I don't have to write a $10 million check for naming rights of something on a, on a, on a pro team. I'm working my largest brands that I have here in, in the state is the university of South Carolina, the university of Clemson.

Right. And if you grew up here or you're from here or you live here currently, you understand the dynamic between those two schools and how big every one of those matchups are when they match up at track and field, football, soccer, baseball, basketball, whatever it is, it's a big to do. And so I'm able to take really my sponsorship funds and keep them low and lower than what a typical state would if they had pro sports, because I don't have to match that pro dollar.

every day, you know, I've got a lot of minor leagues, baseball and hockey and, and all those sports all over the state and we're, we're partners with all of them, but I don't.

Steve (29:04.536)
What about South Carolina United and the USO, United Soccer League?

Josh Whiteside (29:09.84)
And I'm trying, so we have the Charleston battery, which is down in Charleston is a soccer team that we sponsor. so like legitimately, I think pretty much every minor league outfit in the state, we have a deal with and they don't have to be large deals. Right. And so that helps us keep our spin down. Um, when we're very particular on kind of what we're looking for when it comes to value. Go ahead.

Steve (29:33.934)
So this is so interesting. So I stand corrected about it when I was referring to your major league teams. Yes, we have USL and obviously some minor league teams as well and other sports.

I was in processes and of course you don't have the big ticket items that you might have in your neighboring states, let's say like Florida, where you have quite a bit of choice to spend seven to eight figures on sports sponsorship. Let's go at the college level. Let's take a real practical example. Let's go to the Learfields or the Playflies, which is becoming colossal.

enterprise in their acquisitions of late over the past four years, five years, know, very recent entry into the sports marketing space. And they've just, you know, really, I think, demonstrated enormous desire to be a major national as well as I think ultimately a global player. Obviously, you have groups like JMI. When you look at the groups that are selling and committing like we just saw Playfly commit to Texas A

$550 million deal, 10 years, 55 million year, up from the 30s that it was at. And committing that type of long-term commitment, banking on the fact that the likes of, know, SCE, do you say, do you use the abbreviation SCEL? So thank you. So approaching SEL, South Carolina Education Lottery, knowing that you could be a naming rights sponsor of a venue,

Josh Whiteside (31:06.317)
Yeah, we We call it Cell. Yeah.

Steve (31:17.132)
You could put your name on a lot of locations that cost seven figures for major schools like, particularly like Clemson in South Carolina. So in a typical year, first and foremost, I gather you do sit down or are approached by these major multimedia rights owners. And how did you, again, as a sports marketer,

distinguish your decision-making from not being tempted with that 1.5 % remaining spend on your gross sales, which again, we calculated was another $36 million, where you could entertain an overture from a playfly and say, yes, we want in. Or Clemson, in the case of Clemson, everything's in house today. They don't have a third party sales group, but they are still approaching companies for seven figure deals.

And again, long-term, those are eight-figure commitments. So how do you navigate that when you're approached by those firms or the university themselves to become a bigger player? What is your typical response and how do you determine what's good enough value for you?

Josh Whiteside (32:26.746)
Yeah, you know, and I think a lot of responsibility is put on myself, obviously, and then we use our agency as well to kind of help navigate some of these scenarios. But I have a board that I have to report to. And we have four board meetings a year, and then I've got four other ones that I talk about sponsorship and marketing in. And so I eight board meetings a year that I have to sit down in front of my board and explain spend. And for the past 20 years, we've been under that half percent.

And so if I was to jump that up to 1%, that's a lot of money and they would, it'd be a lot of negotiation back and forth with myself and my board on why I thought we needed to spend that money. And so, you know, I think we've been very fiscally responsible and gaining the assets that we need and the attention that we need with our sponsorships without, without overspending. You know, I think that the nature of sponsorship these days can sometimes get to an overspend or a competition.

you know, between brands and that's just not who we are, right? It's not who we are. And so, and we know that and our partners know that and we've had long standing relationships. You know, we're 20 years deep in our Carolina Clemson relationships. And so, you know, we have been, we've been dealing with them in different levels for so long. And so, you know, I think when we're talking about growth and sponsorships, have to identify what is valuable to us as a partner, what's valuable to the universities.

you know, in, for us, when I got here almost seven years ago, we were, you know, we were writing them a check, a small check, you know, for a lot of signage, you know, and there was a lot of, there wasn't much, there's not much meat in the bone there. Nothing that was really giving us, I think what we, we needed as a lottery from an advertiser's perspective and a sponsor's perspective.

Steve (34:13.294)
What did you need, by the way, as

Josh Whiteside (34:16.11)
You know, well, that was the that was the quick identification of, what is valuable for us and to kind of go back on a point you made earlier, you know, when we spend money in that, that advertising marketing budget, it is for TV, advertising, radio, all the sponsorships, etc. But it's not to sell mostly not to sell lottery tickets, which is kind of funny. We spend we kind of split it up in three different ways. We have a lottery budget, which is okay, we need to advertise the games that we have out.

We have a lot of we sell a lot of scratch offs in the state right scratch tickets and so we had to advertise powerball and mega millions of the big jackpot games and other games that we have our second bucket as I'll call it is our Beneficiary bucket so it's where the money goes right the money goes to higher education We're one we're one of the few states that spend a lot of money Well a lot of states been but we spend a lot of money on advertising our beneficiaries and telling those stories humanizing the lottery

Your dollar is going to good use. And so that's our second bucket. Our third bucket is our responsible play bucket. We spend a lot of money there, again, on advertising and talking to our consumers about playing responsibly, knowing the signs, knowing the warning signs of what's not very not responsible, offering the help that we can, and pointing them to partners that we have that can help them if they have.

have concerns. so when I, when I look at those three buckets and think about sponsorship, the two buckets that kind of come to play in my mind, obviously are, the games themselves, right. And then where the money goes. And so where I have really focused for the past few years is on where the money goes. I don't go into a lot of these universities, Carolina and Clemson, and you will rarely see advertisements for games like scratch offs and numbers games, et cetera.

What you're going to see is the value that the lottery brings to all of these people that are viewing these athletic events because they're parents of, grandparents of, and students that receive the scholarships.

Steve (36:21.272)
So I haven't just, it seems so evident that the next question has to be, what you've just described is an organization that is giving back to the community by virtue of showcasing these talented youth who are in college and narratives and storytelling in a way that really.

highlights what the proceeds or that amount of money that you've allocated toward this fund, the 590 million that goes towards the education spend. What I have yet to understand is what are you getting out of sports sponsorship? So you spend money on sports sponsorship, you very rightly said,

which we firmly believe at SportsBiz, that a logo on a board is important as long as it's holistically part of a holistic campaign and that the messaging is effective, it's digestible, it very often has product placement so that at least people can associate, the consumer can associate some type of brand identity.

along with the name and that again you're not with too much clutter that it's going to be ingestible that the cameras that are covering it are not moving all the time in the span of which it's on duration on TV is not 0.8 to 1.2 seconds with a moving camera with eight other boards or 12 other boards around you because then it becomes virtually an impression without making an impression. So you've pointed that out and that's very much a 20th century sponsorship paradigm.

just get it out there in the aughts as well. We just wanna get out there. And by the way, it is a strong, meaningful part of the 12-14 major benefits of sponsorship, sports sponsorship, to have branding at Venue in some capacity, whether it's physically at Venue, whether it's graphic superposition or audio references. I wanna go back to you again as the sports marketer and help us understand.

Steve (38:31.086)
Your sponsorship that you described is again a giving process, narrative storytelling about the winner, you the people who are benefiting from your money. How did you as a lottery, how do you as a lottery with your sports spend? Tally up what you consider was a return on investment.

Josh Whiteside (38:52.814)
Yeah, that's a great question. know, and it's kind of a two part answer. think, you know, one part being we do a lot of branding and storytelling when it comes to our sports sponsorships. That's where I think we as a branding guy, as I've lived most of my life and my professional career as a branding person. so, you know, that storytelling opportunity that we're afforded every time that we're out there, whether it's. Yeah, yeah, totally. And so.

Steve (39:19.31)
Could you us an example, please, Josh?

Josh Whiteside (39:22.574)
You know, I think what we'd like to do is, I said earlier, we like to humanize the lottery. The challenge with the lottery, and this is where we find a little ROI here, the challenge with the lottery is it's an awareness factor, right? People don't think about the lottery. For the most part, the average American doesn't think about the lottery until a Powerball or a Mega Millions jackpot is over a billion dollars. You know, it used to be $300 million and they'd start thinking about it. Now it's got to get close to a billion dollars.

before anybody thinks of the lottery. can go, like, just think about it, Steve. The last time you thought about going to buy a lottery ticket was probably the last time the jackpot was high and somebody on the Today Show told you, should probably go buy one, right? And so that is, in a nutshell.

Steve (40:05.134)
I have to just admit that my persona is perhaps a little bit different. I'm kind of out on my mountain bike, just grinding away at our company in this bootstrap startup of ours. But yes, I get that narrative. You're on the highway, they saw your big, big, big billboard, know, the big, forgive me, out of home giant.

Josh Whiteside (40:13.732)
Yeah, probably a little bit different, but for that, yeah. Yeah.

Josh Whiteside (40:24.463)
Yeah.

Josh Whiteside (40:31.824)
That's right. Yeah.

Steve (40:34.828)
roadside promotion, everyday changing and showing us that it is an incredible sum of money that someone's going to take home. And they get motivated to go buy.

Josh Whiteside (40:43.748)
Yep. Yep. Because the challenge we have in our state is you have to physically get out of your car to gas station, walk into a gas station, ask for a lottery ticket, then get back in your car. You also have to fight the line of everything that's there. The last time you got out of your car and went into a gas station is probably a long time, unless you're on a road trip and you stop for some snacks, but it's very rare. Right? And so there's a very, there's a transaction issue that we have of getting people into a store.

that is not a core consumer, right? And so, yeah, it's big.

Steve (41:13.87)
That's a pain point. The pain point is you guys think about how do I get people out of their car into the point of sale and make that acquisition.

Josh Whiteside (41:24.603)
100%. You know, and it's a big pain point because we're cash only. You can't do it on your phone. You can't buy it with a debit card from an ATM, from a, um, a vending machine. Like we just don't have that here in South Carolina. So what we try to do is take these opportunities in our sports sponsorship to tell a story because we know, and, and if I go over to Williams Bryce stadium here in Columbia, you know, there's 80 to 85,000 people in this stadium scenario, or I go over to.

the basketball arena where there's 20,000 people. It's a very intimate, intimate with 80,000 people, but we get some moments in those times that we can highlight a beneficiary. So typically, an example of what you're asking for is at a football game. I will have one of my assets is a pregame right before kickoff game ball scenario, right? If we think about a game ball scenario, most sponsors are like, yay, I've spent all this money.

And I get to get the game ball as in I get to take it back to the office and we get to see, you know, that's, it's great, but nobody cares at the end of the day, the consumer doesn't care. So how do I make our consumer potential consumers care about what we do? So what we do is we take that game ball scenario and I've passed that ball over to a beneficiary and we take that minute to two minute segment. We talk about that person, you know, here's Jill. She's a teacher at the local elementary school and she went to the university of South Carolina.

received a life scholarship, she came out of school debt free, now she's off doing great in our state helping the kids, et cetera, et cetera. And we just replicate that. Yep, yeah, so I bring her down to the field with me, right? And so she comes down. It is a complete takeover, right? So we have Jumbotrons, we have LEDs, we have the PA read, the camera's on us, and it's all about that person. And so.

Steve (42:59.374)
He gets called down onto the field.

Is that a narrative tweed up on the Jumbotron by the way?

Steve (43:15.896)
How do you maintain the game to game?

Josh Whiteside (43:19.288)
And so we don't do it every game, right? We get an entitlement, probably one or two per sport a year, depending. And then we also kind of filter in, between the Carolina and Clemson series, we own what we call the Palmetto series. It's one of our bigger, it's really our biggest deal that we have where every time South Carolina and Clemson match up in any athletic event, the winner

or the winner of that event gets a point to the Palmetto Series. And at the end of the year, after all the points are tallied and all the sports are played, the school with the most points wins the Palmetto Series for the year, then there will be a trophy presentation, the first football game the next season. We have some tie-ins of product there, which I can go into if you'd like in a little bit, but we try to basically bring relevance to the lottery, humanize what it does.

show people in the stands that this is real because as you're sitting at a university's football game or basketball game, a lot of people there have been touched by lottery funding and don't know it. And so once they have identified that, you know what? My son or daughter received a life scholarship. I didn't realize it was funded by the lottery. So the next time I am at the grass station or the grocery store and I make that purchase, I know that my money is going to go to a good fund.

Steve (44:40.238)
By the way, just to contextualize for our show, the 12 million, that 0.5 % that you keep stable and feel very committed to as a fidelity that this is a type management of respecting that every five grand we preserve goes to another scholarship. What percent of the 12 million will go expressly to sports sponsorship?

Josh Whiteside (45:04.528)
it's a great, we spend roughly about nine to 10. Let's see. I'm trying to think here off the top of my head. It's a very, it's not, it's probably a million, less than a million dollars to support a million dollars in sports sponsorship. know, everything else is an advertising. Yeah. Yeah. We, we try to, yeah, we do. think we do a really good job at that.

Steve (45:23.278)
for your entire career year. Yeah.

Steve (45:30.872)
When you're not doing those showcases and those narratives, which is phenomenal, by the way, that's a great activation. The idea that you're bringing down and the Keith, two words you said that just lighted me up was debt-free. Here's Julia or Harriet or Natalie, and she is debt-free because of our support. I mean, that's a very compelling, compelling statement to have stated among.

tens and thousands of youth, of students, right? It's very motivational. What I want to understand is on the off days, you said maybe do that twice a year. So on in all those other games, what might you do to have prominent activation?

Josh Whiteside (46:17.614)
Yeah, know, activation is tough because for as big as we are from a dollar standpoint, for as much revenue as we generate, I have a staff of seven people on my marketing staff, and that includes me. And so, you know, when we talk about activations, you know, it's tough sometimes to get all over the state and activate physically and do things physically around all of the things that we are a part of. Now,

There are other, obviously we get a lot of other assets like LED boards, have signage, we have game programs, all the other things that a typical sponsor would get that we find value in. It's those unique opportunities that we have to truly really amplify those moments. so that's, know, we still find value in those things or we wouldn't have them. so.

game entitlements for us are a little bit bigger and we put boots on the ground and we can activate there. But all the other games that are out there, we're still getting enough and a lot of awareness, I think, from an advertising perspective.

Steve (47:30.21)
By the way, as you get out of a cash only state of being, does that start empowering you the way sports betting organizations are empowered today to conduct online acquisition of ticket? Can I purchase? Is your expectation that down the line I'm going to be able to acquire a ticket online and not have to get out of my car, go into point of sale, make that cash acquisition?

Josh Whiteside (47:57.358)
Yeah, I think eventually it's going to get to that. the first step is debit cards. With debit cards, online play does not come with that. That's a whole nother piece of legislation. And so that's going to be another time that's going to kind of go through. So we're going to get sort of get used to what it's like to have debit card sales, you know, as soon as we get that. And we think that's going to help increase some sales, ease of play.

But once we get into what they call the iLottery space where you can play on your phone and you can buy digital scratch ops and you can play digital games and you can buy your Powerball and Mega Millions and all that, we have seen in other states that increases revenue drastically. And so that is another space that once we get to, know, there's growth on who we are as an organization and there's going to be a lot of growth that happens when we get that. You know, we're going to need a lot more staff to do lot more things, you know, and so

from a marketer's perspective, we're now heavy into, we'll now be into heavy digital space. So I'll need a full digital marketing team that kind of helps me drive what we need to drive. And so there's a lot that comes with that. And we're trying to prepare ourselves for when that happens, but it's not going to be any anytime soon.

Steve (49:15.406)
By the way, when I was looking at the numbers of the 45 entities, states that have lotteries, South Carolina, by my calc, was number six or seven of per capita spend on lottery tickets. It was just over $500 per person in the state of South Carolina. What is it when you look at states, let's say like New Mexico, that's approximately $83 per capita?

or you look in North Dakota at $47. New York State, about 565, so only about $60 more per capita in New York. We have a much bigger population. New York generates about an awful lot of money in its generation, about 8 billion, almost 10 % of all lottery sales come from New York State. What is it when you look psychologically or demographically or psychographically?

What is it when you look state to state that has such a heavy impact on how you have this real distinct spread range of Oklahoma being $107, North Carolina at 463, so very close to South Carolina? What are those factors that have a population behaving differently as relates to its lottery?

Josh Whiteside (50:41.028)
Yeah, you know, we have for a while been one of the leaders in the world as a lottery is, you know, we, we do a really great job at creating lottery products. we've got a great product team that creates a lot of great scratch offs. and, in our, our only sports related scratch off currently is our South Carolina ticket and our Clemson ticket, which we have a complete sponsorship program around that we could probably talk about six hours on, you know,

Steve (50:57.388)
Are any of them sports related?

Josh Whiteside (51:10.48)
It's a full deal that I'm pretty proud of. That kind of helps us tie in, not only beneficiary, but also product at the same time. we have a big, big reach in the state when it comes to that. when we're talking per caps, we're up there in the world. We're top five, to be honest. so people love our games. We have a lot of numbers players. So I'll pick three and I'll pick four.

They love our scratch offs. And so we do well. Our odds are really good from a scratch off perspective. We think we've identified what we like, what consumers like to play. And, you know, we've created that model and we kind of roll with it and other states ask us all the time, how are you doing it? What are you doing? You know, like, how do you guys have such great sales on this? And, and I mean, I always take, I always take the credit and say it's our advertising. So.

Steve (52:06.754)
By the way, and I'm gonna, we're gonna cut this out, but I know that we started a little late with the technical. Do you have about another nine, 10 minutes or are you at the time?

Josh Whiteside (52:16.432)
I've got as much I have nothing on my books this morning. Yep. Yeah

Steve (52:19.342)
Okay, thank you, because this is extremely interesting. So, and we'll start up again now. So very interesting that we could talk six hours about that. I'm intrigued and I wanna understand about your last comment as well. Because in sports sponsorship, in sport, because in sports sponsorship.

We believe very much a 20th century model is descriptive analytics. And there's, I just look and someone does an evaluation generated of what did I get out of my sponsorship? And particularly when I look at very often the media component part, which is looking at TV, linear or streaming, looking at what I got with social web. And we have a new feature in one of our solutions, which is on live spectator. How did I engage? How did I reach?

What was my reach to live spectators? Just because I have an 80,000 seat stadium does not mean I reach 80,000 people with my message. Which depends on position, seating, et cetera, and how the stadium is built, obstructed view versus non-obstructed. So when we look at this, descriptive analytics are one in a certain context, but comparative analytics, we believe, are king. And you just said something really interesting that was on my mind.

Josh Whiteside (53:19.568)
Correct.

Steve (53:41.55)
When you look at all the other lotteries around the country, are there cultural distinctions that you would say to the South, this can work here, but what our friends in Maine or New Hampshire or California are doing or New Mexico are doing, you look at it at times and just simply say, it can't work. And it would be almost like looking at a promotion that is being done in the Boston region, New England.

and let's just say it's hockey related, and then trying to deploy that in San Francisco and say, but why would we do that? It's a non-fit. In your world of marketing, do we have those comparatives where your cohorts can teach you how to improve, but you also have some areas of what they've done that just could never work in your state because of the demographic, psychographic elements?

Josh Whiteside (54:33.87)
Yeah, totally. You know, it happens all the time. We're, go to a few conferences a year and I'm always talking to my counterparts about what's working. You know, I'm listening to presentations, I'm giving presentations. And so like, we're trying to figure out, well, it's interesting what you're doing there in your state in New York or what have you, but I, it wouldn't work here. And whether that's just a cultural thing, to be honest, there are some things that we do in South Carolina that don't work in North Carolina or that don't work in Georgia. And so it's something.

Steve (55:00.174)
Could you give us an example of that, please?

Josh Whiteside (55:02.774)
Yeah, so, you know, it's interesting on, I'm trying to think of some specific, I can't think of one off the top of my head, but there's definitely been some in the past where it's just some games don't work other places and some games work here. It's really weird. Lottery is a very weird space, what I've learned.

Steve (55:17.262)
Hmm.

Steve (55:23.982)
Is that because of the ticket item? Is that because of what it might cost to play that particular game? Or is it the structure of the game?

Josh Whiteside (55:29.136)
No, yeah, it's more the structure of the game. really, think the regionally where we are in our state, just the players have got so used to certain games. And, when other states try to replicate those games, it doesn't quite work in their states. so, but then there are some that do work great, you know, and sometimes we have a game like have a game like Cash Pop. There's a sign behind me of the people and it's a numbers game. You choose 15 numbers.

we put together what I think is a phenomenal advertising campaign for it. and we'd lead the nation in sales sometimes and we're right there at the top and people are like, how are you guys so good at selling cash pop? Again, I think it's the advertising, but, it's the same game replicated throughout the country. Others choose to advertise it differently than the way we advertise it. And so sometimes maybe it's the advertising, which I'll take credit for. And then sometimes it's not, maybe it's just the game itself. It's.

It's a very unique scenario. Lottery is very weird on how it works. And once you have found sort of that niche and that thing that works, you kind of roll with it and see what else can work around it.

Steve (56:37.688)
Would a benchmark of success be by the way that you surpassed Massachusetts for per capita spend on lottery?

Josh Whiteside (56:44.144)
It's impossible. It's not going to happen. They've been number one forever. And I don't think anybody's trying to go, you know, after them for that. You know, their model is way different than anybody else's model. When they, if I recall correctly, when they launch a game, their game sits out there for, it could be a couple of years, right? When we launch games, we launch, we launch a couple of games. We launch probably four or five games every three to four weeks.

Scratch-off games when I'm talking about and and so we were at one point launching 80 scratch-off games a year a lot of states don't do that a lot of states probably launch around 40 or 50 and so we keep the inventory fresh We keep our players engaged we keep it rolling and so that was the model that works for us And and I think that has really helped us get us to where we are. So like I said state to states different

Steve (57:35.662)
you look at the biggest changes impacting your life as a sponsor, particularly at the university level, obviously name image likeness is in the midst of revolutionizing sport. I said many, many, years ago that what it's going to do as well, it's going to take money away from mid-level athletes. And you're going to find a lot of people doing what the VC model is in investing in groups like ours.

which is I'm gonna try and pick out 20, 30, 40 athletes, hope that a few stick, go on to play pro and have a long-term relationship with them. In that realm of NIL, there's been an enormous amount of pressure on the NCA of how monies are allocated and schools obligations to their athletes to start paying for play. These are athletes who come to the school primarily for sport.

They want to excel in a lot. Most of them have this belief that they can go on and play pro, although a minute percent ever do. Tell us about how you as a sponsor are impacted by NIL, where the universities now have this extra obligation to make up a lot of money that was previously only in their kitty, that now has to get divvied out.

And what do they typically do outside of their booster clubs? They're really looking at their sponsors, ticket sales, merchandising. How has that impacted you or has it not?

Josh Whiteside (59:09.86)
Yeah. So, you know, as of recent, we started to get into next year's negotiations with some of our schools about our contract and what our assets are. And of course there's, you know, a bigger ask now. You know, they're trying to, it's their job. It's what they have to do. And so they have to make up X amount of millions of dollars now with it's in IL situation. And, you know, they are going to their sponsors to see.

Are there any other assets that could be valuable to us that we can increase our spend for? You know, and for us, we, like I said, we've been very fiscally responsible in all of our sponsorships and how we manage those. You know, and it's a discussion that you have to have on both sides.

from a sponsorship standpoint. They need and want more money and we don't want to spend a lot of money. And so it's finding that happy balance on what works well for us. if there's a scenario that there's assets that we need that we think are valuable and it costs a little bit more and it's within budget, then I think it can happen. But the thing is I just can't write a check for an extra thousands, hundreds of thousands of dollars for nothing, right? It just doesn't make a lot of sense because they have to make up the money. That's their job.

Steve (01:00:26.702)
It's the same asset sale, same sponsorship engagement, but again, there's this deficit that they have, perceived deficit, because of the distribution to the athletes. And so the pressure comes back in every corridor that they can avenue, they can walk down and pursue. And one of them is obviously sponsorship. So then again, the obvious question is, why am I paying a lot more for exactly the same benefits? We saw that actually in golf with the PGA Tour.

when with the competition with the Live Tour, you had this unbelievable knee-jerk response that said, we've got to increase our prize money for some events from 8 million to 20 million. And what was happening was that next year, you had big events having $12 million more, 11 more in prize money, but they had a lesser field in the athlete pool.

because at that time of the rift in live and PGA Tour, where the live golfers could not play on the PGA Tour events. So same event, big event, 12 million more prize money, a lesser event of sorts. So with your good self, these are usually three to five year deals or it sounds like, were you suggesting these are annual negotiations?

Josh Whiteside (01:01:38.564)
So ours are by law in the state of South Carolina, we can only have one year deals. cannot have a multi-year agreement. what we... Yes, yes. So in our statute, it says that we cannot have a multi-year agreement when it comes to sponsorships and contracts like that. And so the only multi-year agreements we have are bigger RFP contracts like our ticket vendor who creates our tickets, our advertising agencies.

Steve (01:01:46.53)
because of your semi-governmental status.

Josh Whiteside (01:02:08.024)
know, shipping, like bigger things that are outside of the world that I live in. so, so it is a year to year deal, you know, and most of our partners know it's hard because, know, everybody wants to build an escalator. Okay. Here's one year, here's two years, here's five years. And, and, and we can't do that. And so I know it's frustrating for our partners sometimes to not be able to build an escalator, but you know, for us as partners of good faith, we know we're going to be back with Carolina and comes to next year and pretty much everybody that we have dealt business with.

Steve (01:02:16.344)
but it's hard for the rights owner as well.

Josh Whiteside (01:02:37.316)
specifically in the school realm. And they know that we've been there 20 years. And so they're great partners. And I know in these discussions we're having about the NIL deficit there, that they understand where I sit, I understand where they sit, and we found a happy medium, you know, and we have found scenarios that work for us. Sometimes we have to remove an asset, sometimes we have to give an asset, you know, and so we can do that.

Steve (01:03:00.654)
Clear, clear. Listen, what a interesting, interesting conversation, Josh. It's, you know, you don't stop and pause and think, first of all, the nuances, all the legislative considerations, legal considerations, money distribution. It certainly makes anyone who questions the efficacy or ethics, if you will, of gambling.

When you hear about the volume of money being distributed, in this case, just about over 22 % of your full take is going out just to the educational fund, let alone the state taxes that you guys are getting back on as a windfall to the state by virtue of the winners.

you know, presuming that there's checks and balances, which clearly you have on how people spend and not having that credit card at this moment seems like a pretty good protective measure. And I'm sure you have a lot of protective measures and when that legislation does go in your favor to have that alternative acquisition methodology, it's really a fascinating use case of how this type of entity engages sport

very big in the narrative and storytelling, which it seems like if I had to perhaps summarize one of the most compelling elements of what you shared is that you guys have become unbelievable storytellers. And that really is at the, perhaps an anchor of everything you're doing in advertising, not everything, but a strong part of your advertising and sponsorship narrative. And certainly from an activation standpoint, it seems like a very effective, true,

accurate, compelling narrative that it would be hard to stand against how that individual, know, how so many hundreds of thousands of people have benefited from the South Carolina educational or education lottery. So with that said, I'm going to thank you very, much for joining us today. Again, Chief Marketing Officer, a journeyman in sports marketing and Josh.

Steve (01:05:11.062)
Josh White said, why at the beginning and at the end it's the funniest thing. I'm think who I'm thinking of that it's making me slur.

Josh Whiteside (01:05:14.349)
You got...

You got it, Steve.

Steve (01:05:27.276)
So with that said, Josh Whiteside, what a pleasure it is as CMO of the South Carolina Education Lottery to have you on the Transaction Report today.

Josh Whiteside (01:05:39.312)
Thanks Steve, I appreciate you having me. Great discussion. Looking forward to catching up soon.

Steve (01:05:44.832)
absolutely a whole lot of fun and really substantive. So thanks for giving us a tour de force of what it means to stand behind a 2.56 billion sales intake and really navigate that as it relates to sponsorship as well. And the business of rewarding, really rewarding hundreds and hundreds of thousands of residents of your great state. So thank you.

Josh Whiteside (01:06:12.944)
I appreciate it. Thanks so much.

Steve (01:06:15.31)
So Josh, we're gonna have an uptake of your, I'm trying to think what I was thinking on White's side. It's not a hard name.