Minnesota's charitable-gaming shortfall: An explanation

Before an effective solution can be crafted for a problem, the problem has to be correctly defined. That's the challenge with the so-called shortfall in revenue from the electronic charitable games that were approved last year by the Minnesota Legislature and Gov. Mark Dayton to help fund a Vikings stadium.

Some are suggesting that charitable organizations aren't adopting the new games quickly enough — or that Minnesotans aren't playing enough to meet the revenue goals. Both criticisms miss the mark.

We have barely started with our new electronic gambling. And the good news is that the immediate challenge is uncomplicated and easily corrected. Regulatory approval of the new games has lagged far behind what is needed to meet the economic forecasts.

The state based its revenue projections on the new games being available in 2,500 sites as soon as last fall. Six months beyond that target date, fewer than 150 sites are in operation.

Instead, some of the distributors of the new games who have the longest and most trusted relationships with operators remain on the sidelines — waiting for approval. Since the law took effect last year, only two of the five manufacturers that want to do business in Minnesota have been approved. Only three of the 10 distributors that eventually will do business in the state are currently able to do so.

The revenue expected by the state will follow when our manufacturers, distributors and machines win approval through the regulatory process, putting the games in our hands. It's that simple.

The most promising new e-game — electronic bingo linked to sites across the state — isn't yet available at all. By connecting players around Minnesota, e-bingo will generate jackpots of $25,000 or more several times a day. E-bingo promotes the social interaction that makes paper pulltabs popular. While e-pulltabs have their place, they are mainly a solitary game. E-bingo is broadcast on a big-screen TV at every site, allowing players and nonplayers to share the excitement of a big jackpot.

It's also important to remember that linking charitable gaming to public funding of the Vikings stadium was not our idea. Our goals were to win approval of the linked e-bingo games to deliver more money to our charitable missions in our local communities through tax relief.

Ultimately, though, after linkage with the stadium, our local charitable needs and recommendations were rejected. The final bill was a stadium-funding bill first — not a charitable-gaming bill. Charitable gaming became a means to a new end. Instead of an exclusive focus on funding our local charitable missions, we were told to also finance the state's stadium bonds.

Most important, our knowledge of our industry in Minnesota was not sought on the rollout of the games.

All that is behind us. We believe charitable gaming will deliver at the levels needed to finance the stadium once the distributors and manufacturers are approved and machines and games are in the hands of our organizations.

Charitable gaming is stronger than it has been in years, even before the e-games become available. Paper pulltab sales have totaled $5 billion in the past five years. Charitable gaming will generate $45 million to $50 million in tax revenue this fiscal year, largely from traditional games. That's not small change.

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