State looks to expand use of electronic pulltabs for stadium

  • Article by: JENNIFER BROOKS , Star Tribune
  • Updated: December 13, 2012 - 6:52 AM

Gov. Mark Dayton believes e-pulltabs will pay for a Vikings stadium, but the state is considering expanding sales to airport.

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Dave Stokes of St. Paul played an electronic pulltab game at Skinner’s Pub on Wednesday afternoon.

Photo: Carlos Gonzalez, Star Tribune

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The sluggish pace of electronic pulltab sales has the state looking at fresh venues to entice gamblers -- including the Minneapolis-St. Paul International Airport.

The devices are supposed to pay the state's share of the new Minnesota Vikings stadium. But so far, only 85 of the state's more than 6,000 bars have installed the devices. That has led to revenues that are 51 percent below projection, forcing the state to downgrade its revenue estimates by millions of dollars for the coming year.

Gov. Mark Dayton met with state gambling and revenue officials Wednesday for a briefing on e-pulltab sales. Charities have been slow to embrace the new technology, but Dayton predicted the problem will solve itself as the devices catch on and new vendors are licensed by the state.

Some of those new vendors could be at the state's largest airport, where thousands of travelers pass through and sometimes are trapped for hours between flights.

On Monday, the Minneapolis-St. Paul International Airport Authority will consider installing six e-pulltab games in the airport's terminals. The airport already sells paper pulltabs and is the state's single largest vendor of lottery tickets.

Electronic pulltabs seem like a natural fit, said Jana Vaughn, executive director of the MSP Airport Foundation, a travelers' assistance group that would sponsor the games and benefit from the pulltab sales. Electronic pulltabs must benefit a specific charity, with a portion of the money going to the state for the stadium.

"We kind of walked into it gingerly, because it's gambling and we're Minnesotans. Would we become another Las Vegas?" Vaughn said with a laugh. "But it's people sitting with iPods, playing games. ... It seems like it's going to work."

If approved, Vaughn estimates those six pulltab games could pull in as much as $114,000 of net profit a year for the foundation. The airport, with bars spread across two terminals, has the capacity for as many as 25 or 30 e-pulltab sites.

After his briefing, Dayton said he is not worried about the long-term prospects for Minnesota's pioneering effort on electronic pulltabs. The state is the first to use e-pulltabs to benefit charities and capital investment projects like the stadium.

"I don't think there is any reason to be concerned," Dayton said. "Any time a conceptual projection impacts with the real world, things change."

When the news of the lackluster forecast broke last week, Dayton briefly speculated that the devices could someday be installed in grocery stores.

Tom Barrett, executive director of the Minnesota Gambling Control Board, said that idea is not under consideration, but said there has been talk of games at locations that sell 3.2 liquor.

State officials caution that Minnesota's experiment is still in its infancy and they need to proceed cautiously.

The first customer clicked the first electronic pulltab game on Sept. 18. Since then, the games have pulled in $3 million -- most of which went back to the players in the form of payouts. The remaining $450,000 or so in profits gets divided among the venues, vendors, charities, state coffers and, finally, the stadium fund. The more games available, the bigger the state's take.

"Today we have 85 locations. If you checked back tomorrow, literally, we might have 88 or 89," said Barrett, whose staff had just months to throw together a first-of-its-kind system of rules and regulations after the Legislature green-lighted e-pulltabs in May.

Now, other states are watching, hoping to implement the "Minnesota method" back home -- if it works.

E-pulltabs trending

Of the thousands of bars in Minnesota, about 2,800 sell traditional, paper pulltabs. When the state was drawing up its e-pulltab regulations, Barrett said it based revenue estimates on the notion that most of those venues also would want to try the electronic versions.

"What we didn't anticipate," he said, "was the wait-and-see attitude from the charities."

Some charities have feared that the electronic games would steal customers away from the paper pulltabs. Others are wary of the devices' cost and the hassle of maintaining and securing them.

For the first few months, only one vendor was licensed to sell electronic pulltabs in Minnesota, but the Gambling Control Board will consider applications from two more when it meets on Monday. Barrett said a fourth vendor could be licensed by January.

Last week, state budget officials downgraded revenue projections for the first year of e-pulltabs from $34 million to just $16 million.

The economic forecast predicted lagging sales in coming years as well -- $47 million by the end of 2017, about $36 million lower than previous estimates.

Despite that, Dayton said he believes that once more vendors are selling the devices and more venues are comfortable with them, the problem "will resolve itself."

'Crazy if you don't'

Colin Minehart, who has lobbied for electronic pulltabs for years, is installing the devices in his own business. By this time next week, patrons at the Main Street Grill in Alden, Minn., should be clicking away.

"When you run the numbers, you're crazy if you don't do this," said Minehart, who also serves as executive director of the Minnesota Licensed Beverages Association's charitable foundation, which benefits from paper and electronic pulltab receipts.

Watching other charities standing back from the new technology "is frustrating," he said. The devices give bars like his, near the state line, a hook to draw customers in and keep them coming back instead of driving 30 miles to play at an Iowa casino.

Since September, Minehart estimates that electronic pulltabs have brought in between $28,000 and $30,000 for the Minnesota Licensed Beverage's charity, the Children's Fund.

He worries that if more venues don't adopt the devices, the state will start looking elsewhere for stadium revenue -- like possibly an increase in liquor taxes.

Minnesota has pledged $348 million toward the new Vikings stadium

"I just can't believe people aren't jumping at this," Minehart said.

"Everything that's been taken from us, the 0.08 beer, the smoking ban, now I've got something that can give that all back. ... This isn't about getting rich, it's about building patronage."

Star Tribune staff writer Baird Helgeson contributed to this report.

Jennifer Brooks • 651-925-5049

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