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Minneapolis-St. Paul International Airport is poised to greatly expand gambling by offering Minnesota lottery games on thousands of electronic tablets at gates.
A concessions firm would share the new gambling earnings with another contractor and the lottery under the plan, and the airport is looking at getting a piece of the action when it begins.
The airport already offers electronic pulltabs on tablets at six other locations, but they lack the popularity of the lottery games that would be installed on 2,500 tablets that passengers now use for ordering food and drinks.
Officials recently delayed the electronic rollout to address concerns that such modern access to lottery games will undermine a nonprofit that sells lottery tickets the old-fashioned way at several airport locations to help pay for travelers assistance and other amenities.
“It’s our first entry into something like this, and I just didn’t feel we had all the questions answered that we need to have answered,” said Paul Rehkamp, a member of the Metropolitan Airports Commission that oversees MSP. A staff recommendation for the games is expected to be reconsidered next month.
The concessions firm, OTG Management, already has installed iPads at tables of restaurants and bars in MSP’s G Concourse for customers ordering food and beverages.
Under the gambling proposal, passengers could use those iPads to buy Minnesota State Lottery tickets for upcoming draws on Powerball and Mega Millions. They’d be limited to $50 in wagers a week.
Because the G Concourse was redesigned to move tables into the waiting areas near the gates, “those iPads are everywhere,” said airport spokesman Patrick Hogan.
OTG and a technology company that contracts with the lottery would split 5.5 percent of the lottery retailer commission plus a transaction fee. The airport is looking at getting 10 percent of net revenues. Officials haven’t estimated total revenues.
The arrangements are similar to those involving lottery sales at gas pumps and ATMs in Minnesota. But using restaurant iPads to sell lottery tickets breaks new ground. “We’ve really not done anything quite like that before,” said Ed Van Petten, executive director of the State Lottery.
The airports commission in 2011 approved OTG’s overhaul of the G Concourse at the urging of Delta, which partnered with the concession firm at New York’s Kennedy and LaGuardia airports.
But the decision came after stiff competition from another concession firm and a background investigation by an outside law firm for Minneapolis-St. Paul airport into the principal owner of OTG, Rick Blatstein.
A memo from the inquiry described a protracted bankruptcy case involving Blatstein years before he owned the concession firm. The case eventually came before a federal appeals court that found Blatstein “fraudulently transferred his income to his wife in an effort to keep the money from his creditors.” One judge said Blatstein “has systematically schemed” to avoid creditors.
The case ended in a settlement that Blatstein honored. While the airports commission report called the $1.5 million in transfers “concerning,” commissioners said the risk of using OTG for concessions was outweighed by promised airport improvements.
Blatstein and OTG did not respond last week to requests for comment about the lottery venture. He previously said his bankruptcy case, which stemmed from a foundering nightclub business in the 1990s, isn’t relevant to his operation of OTG.
Airport officials this week defended OTG and Blatstein’s relationship with the airport.
“He may have a past and I think critics can present that as being controversial, and it may have been, but as far as what we have seen … it’s been most appropriate,” said Jeff Hamiel, MSP executive director.
“There has been nothing that we’ve seen since OTG has been involved with the airport that would raise any concern with me,” said Rehkamp, the commissioner who sought the delay on the proposal.
Van Petten, the lottery director, said he wasn’t aware of the legal problems of Blatstein and has had no contact with him. Van Petten said if the lottery’s technology contractor and OTG reach an agreement, “we will review it at that time and determine if a background investigation is warranted.”
Rehkamp and Airports Commissioner Don Monaco said they favored delaying action on an airport staff recommendation to allow the iPad lottery games after concerns were raised by Jana Vaughn, who runs the Airport Foundation at Minneapolis-St. Paul.
The nonprofit is expected to sell $24,000 this year in electronic pulltabs to raise revenue for the Vikings stadium. But it also sells paper lottery tickets and paper pulltabs at vending machines and an airport booth to raise money to help pay for travelers assistance, artwork and cultural activities at the airport. It spent $494,741 on such activities last year.
“This new electronic initiative that the lottery was launching might have some negative impact on revenues,” Vaughn said.
But airport spokesman Hogan says he doesn’t see it.
“At the lottery booth in the mall that’s operated by the foundation, the bulk of the people buying tickets there seem to be employees of the airport rather than travelers,” Hogan said.