Bingo, pulltab revenues a gamble for stadium funding
Funding stadium construction with pulltab and bingo revenue may not be a safe bet.
A professor who has studied the issue said predicting the impact that changing state law would have on pulltab and bingo revenue is chancy.
And the organization representing charities that sponsor pulltab and bingo games in establishments across the state said the proposal to allow electronic devices does not go far enough to convince local charities to convert.
In an effort to convince charities to back a Vikings stadium financing proposal, Gov. Mark Dayton and Revenue Commissioner Myron Frans on Friday announced a new plan that would increase charities' profits on the two games. Executive Director King Wilson of Allied Charities of Minnesota was not convinced that charities would go along with the idea.
Without the charities' support, passing an already controversial stadium-funding plan becomes more difficult. The e-pulltab idea appears the most acceptable among legislators.
Dayton leans toward allowing electronic pulltabs because another leading gambling proposal, adding casinos at horse-racing tracks, likely would be tied up in court for years.
The stadium bill would fund the state's $398 million portion of a $975 million Vikings stadium by selling bonds to be repaid with revenue from newly allowed electronic pulltab and bingo devices.
The theory for the plan is that allowing patrons to play on electronic devices would attract more business than the current paper games. Charities for years have said that authorizing electronic devices, a bit like playing on an iPad, would bring more money to them, the host bars and, via taxes, the state.
The state Gambling Control Board and Revenue Department estimate electronic pulltabs and bingo would bring $62.5 million in new money to each the state and charities, with $28 million more to host businesses, such as bars.
Estimates released Friday show large gains in profits from charities that host games. A typical example is the Sexual Assault Program of North St. Louis County that now receives $1,153 from the games would get $20,847 under the new proposal.
But an economist who watches gambling finances wonders about the estimates.
St. Thomas University professor John Spry said it is impossible to predict how much more, or less, could be spent if electronic pulltab and bingo games are allowed.
The estimates could be high or low, he said.
When the state estimates a new type of revenue, it usually is based on existing sales, income or whatever is being taxed. But the professor said there is no way to know how customers would react to a new form of gambling.
"I would suggest to lawmakers that they very, very carefully look at" the proposal, he said.
E-pulltab supporters say Minnesotans are eager to try the electronic devices.
"There's a tech-savvy crowd out there, and it isn't just young people," Wilson said.
Allied Charities board member Genny Hinnenkamp, who works with Duluth's Irving Community Club, said customers have asked for electronic gaming options.
She said paper pulltabs likely still would be offered for those who want to play the traditional way, and also could offer backup if electronic machines fail or are all being used.
Spry said there is no guarantee that gambling would increase.
"This is a revenue estimate with more uncertainly than other revenue estimates," Spry said, and it becomes more uncertain during the 25 years that pulltab revenues would be used to pay off stadium construction costs.
No one can predict how popular electronic pulltabs and bingo would be in the future, he said, so a backup financing plan makes sense.
The stadium bill does not contain a backup.
House bill sponsor Rep. Morrie Lanning, R-Moorhead, said he is confident the Revenue Department and Gambling Control Board did a good job estimating revenue. Also, he said, the bill is written to bring in more money than is needed, allowing a reserve to build up if there are lean years.
Before Friday, stadium supporters planned on $72 million a year from e-pulltabs, but Dayton said that in order to get charities to support the plan the new proposal reduces taxes on charities by $10 million, which lowers the state take by that amount.
It appeared to Wilson, leader of charities that rely on pulltab and bingo proceeds, that tax cuts for charities in the new plan are well under half what they wanted in legislation introduced before charitable gambling was tied to stadium financing.
"With this modest tax reduction and rate I don't know that we are going to see the charities jump on this," Wilson said.
Lanning and Frans said charities should like the large increase in profits the Revenue Department projects.
"It strikes me that there are some pretty impressive numbers for additional revenue that the charities would generate and additional revenues that the bars (that host the games) would generate," Lanning said. "I think they would be making a mistake" to dismiss the proposal.
However, Lanning said, the stadium bill cannot move forward unless it appears charities will buy into the electronic device plan.
Some key provisions in a to allow electronic pulltabs and bingo revenue to fund a Vikings stadium:
- $62.5 million more gambling taxes, up from $37 million annually now collected
- $62.5 million more profit for charities that sponsor the games, up from $44 million
- $28 million more for bars that host charitable gambling, up from $18 million
- Gambling taxes would fall 14 percent
- Paper pulltabs and bingo could continue, even in bars that opt for electronic devices
- Electronic devices would be an option for operators of the 1,200 charitable gambling organizations at 2,800 sites