Minnesota charities hope for more electronic gaming options

Two months into Minnesota's plan to fund a Vikings stadium, only one games manufacturer and one vendor have been approved.

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Electronic pulltab devices made their debut in Minnesota on Sept. 18, 2012.

Photo: Jeff Wheeler, Star Tribune

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Minnesotans have dropped roughly $2 million on video pulltab games in the past few months, games that are eventually supposed to fund the state's share of the new Minnesota Vikings stadium. But so far, just one game manufacturer and one vendor have been allowed to operate here, a unique situation in state gaming history.

Six other manufacturers of electronic games currently are tied up in Minnesota Department of Public Safety background checks.

Minnesota gambling managers meeting Friday in Duluth for their annual convention are watching to see if other competitors will be approved. Until that happens, the potential for funding the Vikings stadium remains in second gear, they say, because many charities are holding back.

"Some of our members are saying they want choice before they make a decision [on the game]," said Al Lund, executive director of Allied Charities of Minnesota, the umbrella organization for charitable gambling groups. "As a community, we are excited about electronics, but we want to see more options."

The Minnesota Gambling Control Board, which also is meeting Friday in Duluth, has no new manufacturers of electronic games slated for approval, said Tom Barrett, executive director of the board.

However, the board is expected to approve several more games from Acres 4.0 and Express Games MN, the sole manufacturer and vendor operating in the state. That includes two new games for the iPad tablets now in use at bars and restaurants statewide, and five more games for a new iPod Touch system.

Other game manufacturers are still waiting. Minnesota Department of Public Safety spokesman Doug Neville said at least three manufacturers submitted applications to the Gambling Control Board in July and August and are awaiting background checks.

Proceeds from charitable gambling are expected to pay the state's $350 million share of the $1 billion Vikings stadium.

Creating tensions

The situation has created tension between Minnesota's longstanding gambling vendors and the new guys in town with the sole distributorship on games.

Drew Naseth, a Faribault-based games distributor, was curious about Express Games MN, so he started exploring websites last month to learn more.

He found no such name listed with the Minnesota Secretary of State office, where companies that do business in Minnesota typically must register. Surprised, Naseth said he reserved the name himself last month to call attention to the matter.

"How does the state do a background check without checking the Secretary of State?" he asked.

Attorneys for Express Games MN now have issued Naseth a request to cease and desist, said company president Jon Weaver, noting, "You can't impersonate a corporation."

Weaver said he didn't register Express Games MN with the Secretary of State because he thought it fell under one of the categories exempt from registration. The company was incorporated in Delaware in June and has an office in downtown Minneapolis.

Bert Black, legal adviser for the Office of Secretary of State, said that, generally speaking, a business with "boots on the ground" in Minnesota, one that is not conducting business solely by phone or e-mail, must register.

"If you've got someone with an office here, who is selling door to door, I can't think of a circumstance where that would not be considered doing business in Minnesota ... and is therefore required to register," Black said.

That said, there is no penalty for failure to register unless the matter is pursued by the Minnesota attorney general, he said.

Weaver notes that Express Games MN already is licensed with the state of Minnesota, and that it pays taxes to the state. He said his attorneys hope the matter can be settled. "We take this seriously," he said.

Crimp on pulltab sales?

Gambling leaders such as Lund say that, ideally, the state would have had several vendors lined up when it launched electronic gaming. But in the rush to start cranking out money for the Vikings stadium, waiting apparently wasn't an option, gambling leaders say. The pulltab vendors that have been doing business in Minnesota for decades weren't prepared to launch new electronic games.

"So this has been like drips coming out of the faucet, rather than the faucet turned on full bore," Lund said.

Meanwhile, gambling vendors long registered in Minnesota say that even if the charities they work with want electronic pulltab games, they have nothing to offer them.

"Until we have a product [to sell], we're just biding our time," said Mike Rizzi, vice president of the Fridley-based Pulltabs Plus.

Weaver said he agrees there should be more competition. But he doesn't think his company should be criticized for being prepared from the get-go. He also noted that his contracts with charities lets them switch vendors with a 30-day notice, allowing them to try new products as the competitin moves in.

Some of that competition will be on hand Friday in Duluth, when up to five electronic games manufacturers will demonstrate their products, said Lund. Lund said he is "keeping his fingers crossed" that the Gambling Control Board will approve some new players.

Jean Hopfensperger • 612-673-4511

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