Minnesota is taking the lead on e-gambling

Vendors race to win contracts for the electronic games the state is counting on to help fund stadium.

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Customers stood in line to purchase pull tabs at the Fridley American Legion on Thursday.

Photo: Carlos Gonzalez, Star Tribune

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The Vikings stadium deal is unleashing the biggest expansion of Minnesota charitable gambling in 25 years while ushering in electronic gaming on a scale not seen anywhere else in the country.

Vendors of the new electronic pulltabs and bingo games already are visiting the Twin Cities, hoping to nab a lucrative contract. Distributors are hawking their services to the state's 1,200 nonprofits and charities that hold gambling licenses. 

The stakes are high. Minnesota's $1 billion-a-year charitable gambling industry, which funds everything from softball teams to VFWs to fire departments, is being counted on to generate $348 million in taxes to underwrite the state's share of the cost of a new Vikings stadium.

Meanwhile, Minnesota suddenly finds itself in the vanguard of charitable gaming. Electronic pulltabs, a game played on an iPad-like device with computer graphics and sound, are expected to boost gambling revenue by attracting younger and new customers. But the new technology can be found in just a handful of states, such as Idaho, Illinois and Florida, and only on a limited scale. That has the Minnesota Gambling Control Board scrambling to hire technology-savvy staffers to oversee games played on cardboard for decades.

 "Our work is just beginning," said Tom Barrett, executive director of the Minnesota Gambling Control Board. "Bingo has been legal since 1946. Pulltabs since 1985. This is the first time they've really changed."

On Monday, the board will host its first meeting to tell charitable gambling leaders what they know.

Don LaCroix, manager of the Spring Lake Park American Legion, is among the hundreds of charitable gambling leaders waiting to hear how Minnesota will roll out its games -- games that haven't even been invented by a manufacturer yet.

LaCroix hasn't decided whether he'll buy any new games, largely because no one knows their cost and how complicated they will be to run.

"We would need someone at the counter to load them, whatever hardware or software is required to run them, space for them ... insurance. What if someone walks out the door with those iPads?" he asked.

"And can we get customers who want to use them?" 

Unlikely white knight

That charitable gambling rescued the Vikings stadium still amazes -- and irritates -- many gambling leaders. Charity gambling leaders had lobbied for several years to legalize electronic pulltabs and electronic bingo, hoping to attract a new wave of customers. They also lobbied hard for tax cuts: Gambling nonprofits, which paid $37 million in state taxes last year, pay an average of 46 percent of net profits to state taxes, according to the group's trade association.

But gambling leaders wanted a standalone bill, said King Wilson, executive director of Allied Charities of Minnesota, the industry trade group.

"Our bill was not intended to build a stadium, but to build community," Wilson said.

Even so, he is pleased the electronic games are now legal. And he has found himself on the front lines of charitable gambling expansion. Last week, he had dinner with one equipment vendor. He's meeting another this week.

"They wanted to see the Minnesota market and how the bars here compared to those in their state," Wilson said.

And with good reason. Minnesota boasts the highest revenues from charitable gambling of any state, nearly $1 billion a year. 

Whether that market will go wild over electronic gaming is unknown. The Minnesota Gambling Control Board has projected that 2,500 of the state's 2,800 gambling sites would install the electronic pulltabs, and that 1,500 would install the new electronic linked bingo.

Charities overseeing gambling, especially at bars and restaurants, are eager to try something different to attract new, younger players. But many of the fraternal organizations that hold gambling licenses, such as the VFWs, American Legions and Elks Clubs, have many members who are well over 65 years old. That's particularly true outstate, where many folks haven't even seen an iPad.

"We've got a good percent [of customers] who could care less," said Rick Rone, manager of the VFW in Baudette, near the Canadian border. "I think it will just be something different."

Even clubs ready to give it a try are often at the mercy of their volunteers. Those volunteers, and staff, soon will need new training and a knack for technology. Hiring a staff person, especially given the dwindling fortunes of charitable gambling, may not be in the cards.

The Baudette VFW, for example, experimented with "linked bingo" a few years ago, Rone said. That's a game where a player in one location can play with other folks in remote locations.

"But the guy who ran it didn't have time anymore," he said, "and we didn't have anyone else to do it."     

The new electronic linked bingo would be more technologically advanced than the version used in Baudette, Barrett said. The new law also legalizes sports game tipboards, but Minnesota regulators are investigating whether conducting the game would violate federal sports betting laws, said Barrett.

Proceeding with caution

Charities in the metro area, and larger charities, may be more likely to try out the new games. Laurie Gluesing, who runs pulltabs in 25 bars and restaurants across the state to support CLIMB theater, said she is likely to try out the games at her larger sites.

But it's unlikely a vendor will want to install equipment at a place with relatively few users, she said. All of her sites will continue cardboard pulltabs, which is required by law.

She's proceeding with caution.

"I'm not sure I'm going to go through the extra work, extra stress, to raise money for the stadium," she said.

Caution or no, the electronic games are at Minnesota's doorstep. The gambling control board received its first vendor application last week, Barrett said. The vendor will undergo financial and criminal background checks in the week ahead.

Plus Barrett and others will visit equipment testing labs this week to learn how the products will be tested before being offered for sale.

Said Wilson: "The wheels are turning.''

Jean Hopfensperger • 612-673-4511

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