No surprise: e-pull tab projections miss the mark

Luther Dorr

Luther Dorr

It’s hardly a surprise that electronic pulltabs aren’t providing the kind of revenue that we were told they would when it was said they would produce $348 million in taxes to fund the state’s share of a new stadium for the Minnesota Vikings.

All the people in charge had to do was ask the state’s gambling managers at the charitable gaming operations around the state.

Many of them would have told you that their organizations couldn’t begin to pay the fees involved to run such an operation.

A story last month in the StarTribune  said there are about 120 sites in the state now that have electronic pulltabs. I suppose that figure was before some were installed at the Minneapolis-St. Paul International Airport last week, where they reportedly will be in six restaurant/bars to begin with.

The unrealistic projection was for 2,500 sites by this coming July and the figure won’t be close to that ridiculous figure.

It’s pretty simple: The costs are too high and the rewards too low.

One company that distributes the equipment for electronic pulltabs has a charge of around $900, I’m told, to install the needed equipment.

Another distributor is doing free installation but takes 30 percent off the net each week as its fee.

You better be selling a lot of electronic pulltabs to make enough money to pay that kind of fee.

Tom Barrett, executive director of the Minnesota Gambling Control Board who seems like a reasonable fellow, said a couple months ago that he expected many, many more of Minnesota’s approximately 6,000 possible bars to be participating.

I don’t see what basis he had to make a statement like that. He sure didn’t talk to gambling managers around the state.

Barrett said in the January StarTribune story that he attributes the “slower-than-expected growth to charities’ desire for more competition among vendors and to the roughly $800 upfront costs to bar owners to install wireless connections for the games.”

Barrett told a Minnesota House committee last month that he now thinks it unlikely that anywhere near the projected 2,500 sites will be up and running by this summer.

Gross sales through last December were way behind what was projected.

I agree with Rep. Greg Davids (R-Preston) of the House committee that projections were unrealistic to begin with.

Matt Massman, deputy commissioner of the Minnesota Department of Revenue, told the House committee that under the revised budget forecast, electronic pulltab sales were projected to bring in $17.2 million by July, and then $53 million over the next two years.

That’s not going to happen, considering that from September through January, they had produced only $900,000 in net receipts statewide after prizes were paid.

Nobody in Mille Lacs County has jumped into the electronic pulltab fray and surrounding counties aren’t seeing a rush by charitable gaming sites to invest in electronic pulltabs.

It’s hard to understand that people in the Legislature believed the take would be anywhere near what was forecast.

Allied Charities, the Minnesota group that lobbies for charitable gaming operations around the state, pushed hard for electronic pulltabs, although I know there were many members who didn’t want them, some worrying that the sale of paper pulltabs, their main source of income, would dwindle greatly.

It’s probably coincidental but the director for Allied Charities, King Wilson, left that position for a job in Hawaii not long after electronic pulltabs got the OK.

There are lots of pulltab players who like the interaction with sellers at gaming sites. They – not all, by any means – weren’t excited about punching an electronic device to play pulltabs.

I hope I’m wrong and that electronic pulltabs pay the state’s share of the stadium that we were told they would.

But don’t hold your breath.

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