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Continued: Electronic pulltabs gain favor for stadium

  • Article by: , By MIKE KASZUBA a nd ROCHELLE OLSON
  • Last update: January 31, 2012 - 10:33 PM

State officials say they are confident that electronic pulltabs in bars and restaurants could generate $72 million annually -- enough to fund the state's share of a proposed Minnesota Vikings stadium.

Revenue Commissioner Myron Frans said on Tuesday that the latest projection relies on different calculations than an earlier estimate that put likely revenues at less than $40 million, because they also included tax relief for the charitable gambling industry.

A legislative stadium working group, which met with Frans late on Monday at a St. Paul restaurant, has tentatively endorsed using electronic pulltabs as a way to provide $340 million toward the state's share of a stadium, projected to cost at least $900 million.

Frans said the enhanced revenue estimate was the result of additional research. "We've just done more and more research," he said. "Every month that goes by, you learn more."

But even as the complicated financial puzzle surrounding a new Vikings stadium appeared to make progress on one front, potential obstacles emerged elsewhere.

St. Paul Mayor Chris Coleman met with Gov. Mark Dayton to complain that a Minneapolis proposal to locally fund a new stadium, which includes money to renovate Minneapolis' Target Center, would financially harm the Xcel Energy Center in St. Paul.

Xcel Energy Center opened in September 2000, causing high stakes competition with Target Center for concerts and events. The result: Both facilities operate on the tightest margins and can undercut each other on bids.

"We need to stop thinking about this from a very parochial standpoint," Coleman said.

Minneapolis Mayor R.T. Rybak has said he needs the Target Center piece to sway a City Council averse to sports subsidies.

The latest electronic pulltabs estimate shows how tricky it can be to make projections for an industry that has seen gross receipts drop $400 million in the past five years.

State officials are still unsure how the move from paper tabs to electronic pulltabs will affect interest in the game.

In one sign of scaled-back expectations, state officials are basing their latest projections on 2,500 locations statewide. Bars with a seating capacity of less than 200 would be limited to six machines. That's down from early estimates of 3,500 locations across Minnesota.

Tom Barrett, the head of the state Gambling Control Board, said officials had even studied what time of day pulltabs tended to be played.

"We dialed back the number of sites," Barrett said. "Originally, the board was thinking, 'Ahh, we can see retail sales locations -- be it bars [or something else] -- get back into gaming where they had gotten out.'" But, he said, state officials are trying to be conservative in their estimates.

Dayton and Sen. Julie Rosen, R-Fairmont, the chief Senate stadium legislation author, favor electronic pulltabs to fund the state's contribution to the project. A state analysis released last month showed that building a new Vikings stadium at the site of the Metrodome, where the team has played for 30 years, would have a $918 million total price tag and require $340 million from the state.

The Vikings have preferred building a $1.1 billion stadium in Ramsey County's Arden Hills. According to the state analysis, that could require a state contribution of as much as $395 million.

Stadium proponents say that unlike a casino in downtown Minneapolis or video slot machines at horse racing tracks, electronic pulltabs are less likely to face legal challenges from casino-owning tribes.

Rep. Terry Morrow, DFL-St. Peter, said that after the Monday night meeting, the stadium working group was "fairly confident" that authorizing electronic pulltabs in Minnesota's bars could generate $72 million a year.

But he said that conclusion was only an incremental step toward solving the stadium's financial and logistical puzzle.

"It's such a complex issue that even if you make progress, [that] doesn't mean you've resolved everything," Morrow said. He said the group was "a half-step closer than we were a week ago" toward producing long-delayed legislation for a stadium public subsidy package, but he added that many details must be resolved.

Morrow said he did not know how close legislators were to a final package. "We don't know the [stadium] site, and without knowing the site, we don't know the dollar amount" of the project, he said. Dayton has recommended the site of the existing Metrodome, but legislators have not yet arrived at a final pick.

Frans said he too is concerned about the durability of electronic pulltab revenue, particularly if Internet gambling expands. "We don't know the answer to that," Frans said of the effect from Internet gambling.

Dick Day, a former Senate minority leader now working for racino interests, said he doubted that electronic pulltabs would provide enough revenue. "I just don't think there's enough money there," he said.

Coleman, meanwhile, said Tuesday that upgrades to Target Center as part of a Vikings stadium subsidy deal would put St. Paul and the Xcel Energy Center in a "very, very disadvantageous position."

The St. Paul mayor wants a "regional approach" -- possibly with revenue sharing -- through a new governing body to oversee the Twin Cities dueling convention centers and sports teams. Coleman is seeking $20 million in state loan forgiveness for the Xcel. "That's one part of the puzzle," he said.

mkaszuba@startribune.com • 651-222-1673 raolson@startribune.com • 651-925-5035 Twitter: @rochelleolson

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