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It took only a month on the job for Washington Lottery’s Director of Finance to increase non-operating revenue by nearly $1 million. No new tickets. No splashy advertising. Instead, Todd Steben and his team generated additional revenue by paying closer attention to the calendar.
Steben spent much of his career in start-ups led by entrepreneurial founders. That experience demanded a highly active approach to cash flow management, which involves monitoring, analyzing, and optimizing the movement of money in and out of a business. Upon joining the Lottery, he encouraged his team to adopt that mindset.
“We took every available dollar that wasn’t committed and started investing those,” Steben says. “In addition, we looked at our payment timing and our vendor terms throughout all of our contracts.”
It is common for government agencies to pay invoices quickly, but that is not a requirement. Most invoices are Net 30, meaning a vendor grants the Lottery 30 days from the invoice date to pay in full. “If we have Net 30 terms, we’re paying them on the 30th day, not the 20th, because that gives us 10 more days to maximize our earnings,” Steben explains. That difference, choosing to hold cash until the date a payment is due, may seem small. Yet the right investment strategy can compound these added time frames into considerable extra income.
The Lottery stored these funds in a municipal investment account. This type of deposit mechanism, offered by banks and similar institutions, holds funds (like payments to vendors or prize payouts) at very low risk. With interest rates reaching as high as 5% over the past year, the Lottery capitalized on every penny.
It paid off. In the first 12 months of using this approach, Washington’s Lottery is projecting roughly $950,000 in added revenue. It represents a notable win for a back-office function that does not get discussed much in the industry. “If we can quote unquote pay for ourselves, we’re doing well,” he jokes.
Steben still hopes to improve returns. He contacted other lotteries to compare investment rates and strategies. For example, if his bank offers 4% (down from the previous 5%), but another lottery secures 4.2%, that insight boosts his negotiating power with financial partners. The entire industry benefits by sharing results and fostering friendly competition for the best rates.
“We’re going to keep doing everything we can to find what’s possible and innovate to maximize our beneficiary contributions and, again, just hold ourselves to that high level,” Steben adds.
Win, Win, Win
The project caught the attention of the Washington State Productivity Board. The board is an independent agency run through the Secretary of State’s office. It offers up to $10,000 for a successful employee proposal to increase government efficiency and unanimously rewarded Steben and his team with $2,700 each because of this strategy. (Editor’s note: If your program earns the state an extra $1 million per year, I think they should reward you $10,000.)
Steben and his colleagues also celebrated with a photo op alongside Washington Secretary of State Steve Hobbs. “We like to give out big checks,” Steben says with a laugh. “But how cool is this? We get to take home a big check while we’re in the business of giving big checks.”
Finance Avengers—stand with Washington Secretary of State Steve Hobbs, “Hulksmashing”
inefficiencies and running for the money.
Next Project
None of this would be possible without an organization that applauds new ideas. Steben credits Washington’s Lottery Director, Joshua Johnston, for fostering an environment where employees can push for inventive ways to maximize beneficiary contributions. That sense of shared purpose has enabled the Lottery to be far more agile. “We have the right culture and the right environment,” Steben says. “Josh and the rest of the leadership team have really created a culture where it’s safe to innovate.”
Steben’s team is far from finished, though. They are committed to driving operational excellence by creating efficiencies and streamlining everyday processes. For instance, the Lottery now emails banks directly and processes everything electronically instead of mailing checks. That shift frees up staff time in multiple areas and removes unnecessary steps from the workflow.
However, he has bigger aspirations, including reshaping how the Lottery handles prize payments. He wants to move beyond the standard cash-or-check approach and introduce a new mechanism that could make a big financial difference. “We’re going to change the world,” Steben teases. Let’s hope the industry won’t have to wait the full 30 days to see what he has in store.