State gambling board is criticized for oversight of charitable e-pulltabs

Report by frequent critic says regulators may have violated their own rules.

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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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In its rush to launch electronic pulltabs to fund the Vikings stadium, the Minnesota Gambling Control Board may have violated its own rules intended to safeguard the integrity of charitable gambling, according to a report reviewed by the board Wednesday.

The board’s executive committee called a meeting to look into the charges, outlined in a 20-page document distributed to the board, to legislators and the governor’s office by Drew Naseth, a 30-year gambling equipment distributor from Faribault.

The board’s executive director, Tom Barrett, denied the allegations. The board has not overlooked any violations, he said, and has worked to ensure the integrity of the games.

Naseth, the owner of Drew Naseth Co. and often a gadfly to state regulators, has worked in the gambling business since the 1980s. He said he researched and wrote the report after observing what he considered discrepancies in the board’s oversight of e-gaming.

He charged that Acres 4.0, the first manufacturer of the electronic games, and Express Games MN, the first distributor, set up their games at O’Gara’s Bar in St. Paul before winning board approval. Naseth cited a report on Minnesota Public Radio, prepared the night before the games were approved, that said, “iPad tablets with dedicated gambling software were being programmed and charged up.”

But Barrett said that he did not consider the iPads and related devices “gambling equipment.” The iPads only become gambling equipment when loaded with games, he said. And records indicate no games were loaded before board approval, he said.

Another alleged violation: Under Minnesota rules, manufacturers of gambling equipment cannot give loans for the sale or lease of their equipment for more than 30 days. But under the contract between Acres 4.0 and Express Games MN, the iPads are described as a loan.

Barrett agreed that is the case. But the distributor must pay several fees associated with getting the iPads running. And if the system fee covers the value of the iPad device, “then it would be my position there is no extension of the credit,” he said.

Naseth did not comment publicly on the report. Two gambling managers offering electronic games, however, voiced their support for the gambling control board’s oversight of the new industry.

“Our position is that the more regulation, the better,” said Jon Weaver, CEO of Express Games MN. “If people have questions about the integrity of the games, it’s better to air it in the open.”

Al Lund, executive director of Allied Charities, declined to comment on the allegations, but said he had faith in how the board would handle the matter.

The issue was referred to the full Gambling Control Board, which meets next week.

 

Jean Hopfensperger • 612-673-4511

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