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Continued: Gambling firms drove flawed Minnesota e-pulltab funding plan

Weaver told Barrett that the estimates he’d developed were “conservative,” based on sales from video lottery terminals in Montana, South Dakota and Oregon.

On March 9, 2012, Barrett sent Weaver the following e-mail: “As we discussed, here is the revenue model I am using to project potential revenue from the electronic games. … Interested in your thoughts on using this model.”

Weaver responded: “One of the biggest issues that jumps out at me is the number of tickets sold per hour. … Our games run between 4 and 6 wagers per minute ... The assumption that a player will play one ticket per minute is not realistic.”

That same day, Barrett informed Weaver of the state’s plans to release its Vikings funding proposal.

“Hot button issues for insight from you,” Barrett wrote. “As a percentage of net receipts, what do you see as a ‘fair’ percent to allocate for equipment/vendor expenses which would include the distributors that handle the product from the manufacturer?”

Weaver responded, ending with: “I will send your spreadsheet to our folks in Las Vegas and I’m sure that they will have some thoughts.”

Conflict of interest?

Likewise, Acres 4.0, the first company approved to manufacture the e-games, was consulted on testing standards for the games. On May 23, 2012, Weaver wrote that White at Acres 4.0 “is working up his thoughts on testing standards.”

Barrett said it made sense to contact Weaver and Acres 4.0 because they were slated to be early and major players in the Minnesota market, and they had intimate knowledge of the games that would be introduced in Minnesota.

“They were ready to invest millions in some games,” Barrett said.

He said the communications posed no conflict of interest, as they did not interfere with any licensing or regulatory action by the board.

The e-mails suggest a beneficial relationship between the two.

On March 30, 2012, Barrett asked Weaver to endorse his sales projections, as he was meeting with Vikings officials. “It would be helpful if I received your letter of support in regards to the base model we used to project revenue,” Barrett wrote.

Meanwhile, charities that have run charitable gaming in Minnesota for decades were not asked to help with projections, said King Wilson, executive director of Allied Charities of Minnesota at the time.

Wilson, now retired, said Allied Charities “was involved in some initial negotiations, but were certainly not involved in the development of any formal projections and were not part of the give-and-take that occurs during the creation of valid economic forecasts.

“After the bill was introduced we were asked to support the bill, which we declined,” he said.

Minnesotans already were spending $1 billion a year on charitable gambling, mainly paper pulltabs. The projections claimed they would quickly shell out another $1 billion for the electronic games.

“That kind of revenue stream takes a long time to build,” Schultz said, “especially in Minnesota where you already have one of the nation’s most well-developed charitable gambling markets.”

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