Charitable gambling sales in Minnesota have surged past $2 billion annually, double the total wagered as recently as five years ago.
A strong economy and growing popularity of electronic pulltabs helped boost sales about 16 percent in the year ending June 30, according to preliminary estimates by the Minnesota Gambling Control Board.
After paying out winnings, veterans groups, youth sports associations and other nonprofits that sponsor the gambling are expected to net about $300 million.
“With a good economy you have more discretionary income and you have more people who are going to bars and restaurants,” said Tom Barrett, executive director of the Gambling Control Board.
While more money than ever was spent on pulltabs, bingo cards and meat raffles last year, taxes and the cost of running gambling operations often eats up a significant share of gambling proceeds. In recent years only one of every four dollars of gambling revenue has made its way to the advertised charities, according to Control Board records dating back to 2013.
In fiscal 2017, for example, gamblers wagered $13 million at AMVETS Post 1 in Mendota. After winnings, taxes and operating expenses were paid, the veterans group received $54,000. That’s less than half the $115,000 salary of the gambling manager, according to tax records.
The Minneapolis Hockey Association lost money on its gambling operations that same year, despite taking in $508,000 in gambling revenue after payouts, according to Control Board records. After paying $166,000 in taxes and $347,000 in rent, advertising and salaries to sell pulltabs and run raffles or bingo nights, the hockey group wound up $5,000 in the hole.
On the other hand, some smaller operations that pay less in taxes and have lower operating costs are able to pocket a higher share of gambling proceeds. The Knights of Columbus council in Fairmont, for example, made just $66,000 in gambling revenue after paying out winnings, but it was able to keep $49,000 — 74 percent.
Traditional paper pulltabs remain the king of charitable gambling, grossing an estimated $1.5 billion in sales in the fiscal year that ended in June. And electronic pulltabs, after a slow start when first introduced in 2012, are beginning to take off. But early numbers show that every form of charitable gambling was up in the most recent fiscal year, including meat raffles and bingo, Barrett said.
Barrett also thinks a greater share of gambling proceeds may end up in the hands of nonprofits. Last year, they paid more in state and local taxes — $70 million — than they kept for themselves.
“It’s still preliminary but it appears that more is getting to the bottom line,” Barrett said.
The current gold standard for high gambling earners trying to keep costs low is the Blaine Youth Hockey Association. It pocketed $841,000 of the $2.2 million in gross revenue it raised, despite paying nearly $780,000 in taxes.
“We’re just frugal,” said Suzanne Slawson, the Blaine group’s gambling manager. “We reuse anything that we can reuse. I do a little advertising, but definitely not a lot. I always make sure to shop around when it comes to the things we’re required to pay for, like hiring accountants.”
Youth hockey programs like Blaine’s have long been the biggest winner of charitable gambling proceeds. Four of the top 10 gambling earners in 2017 were hockey groups, and one of every five dollars that made it to charities, or $10.8 million, went to youth hockey programs.
That beat the $10 million that fraternal organizations pocketed after all expenses that year, and was second only to the $14.5 million raised by veterans groups.
Hockey programs use gambling proceeds to offset the cost of rink time, arena improvements and scholarships for players who can’t afford league fees. The Minneapolis Hockey Association didn’t make any money in 2017, but Tim Hanson, the group’s president, said it has hired a new gambling manager and is trying out new bars to sell pulltabs.
“We looked long and hard to see if we wanted to keep doing it,” Hanson said. “We decided to right-size the operation and try to make it more efficient. For pulltabs, it’s really about getting into the right location so we’re going to keep looking at locations.”
Youth sports teams are helped by their relatively large and enthusiastic memberships and “a lot of parental involvement,” Barrett said.
“If they’re fortunate enough to get a good [gambling] site and then they have that support from parents to use that site, they can really make it work,” he said.