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Meanwhile, longtime Minnesota distributors wondered why it was taking so long for their license applications to be approved by the state Gambling Control Board. In the state of Virginia, by contrast, where electronic games are also rolling out, existing distributors did not have to reapply for licenses, said Michael Menefee, program manager for charitable gambling.
And it wasn’t until December that a second e-pulltab distributor was approved for Minnesota.
The initial revenue projections didn’t factor in the long wait for background checks of both manufacturers and sellers, which have taken months at the Minnesota Department of Public Safety, gambling veterans say. Nor did the projections factor in the months needed for games to be approved and certified.
“We still only have two electronic pulltab manufacturers doing business,” said Lund. “We have two linked bingo manufacturers that would like to be in business but are still in the process of being approved.
“We have seven distributors licensed to sell electronics but no product to sell,” he said, referring to several distributors waiting for their games to get approved.
The state Gambling Control Board has said it must ensure that games follow the approved standards, which can take time. Likewise, the background checks and licensing process are critical to ensuring the integrity of operations, they say.
Minnesota started from a difficult position, noted John Smolic, president of linked bingo manufacturing company EGS, a St. Louis-based company awaiting approval of its bingo game.
No other state has launched electronic pulltabs and bingo on such a scale, so it is working with new technology and with no model to follow.
Another issue is that there’s been little marketing of the new games — unlike the Minnesota Lottery, which has a budget to advertise on billboards and TV, noted Tom Barrett, executive director of the Gambling Control Board.
Under the stadium funding plan, two taxes would “blink on” if revenue projections fall short, said Phil Anthony, research analyst at the Minnesota Department of Revenue. One would be on a new dedicated game from the Minnesota Lottery.
The other would tax the sale of box seats and suites at the stadium.
The outlook is not completely grim. The pace of e-gaming is picking up. Electronic bingo sales look promising. Paper pulltab sales are up about 6 percent. Taxes on all these forms of gambling will help fund the stadium.
Key players in the $1 billion a year charitable gaming industry believe electronic games have real growth potential.
The problem is that too much was expected too fast, they say. Said Lund: “Anyone who thought charities could double their state taxes in one year was wrong.”
Jean Hopfensperger • 612-673-4511