The state of Minnesota appears poised to bungle the success of electronic pulltabs, and it is a mess entirely of its own making.
Nearly a decade ago the state threw its support behind e-pulltabs as a painless way to fund a new Vikings football stadium and modernize the old-fashioned paper pulltabs that for decades were a vital source of funding for local charities.
Now the state wants to change the deal. American Indian tribes, given exclusivity over casino gambling decades ago, have decided that e-pulltabs are too popular, a little too fun and a little too much like slot machines. Having failed to persuade an administrative law judge on that point, they now want the state to ban e-pulltabs in their current form. With uncharacteristic speed, the House obliged, proposing limits that would, if passed, go into effect next fall.
Rep. Keith Franke, R-St. Paul Park, himself a bar owner who has a partnership with a local charity on pulltabs, said he and others were caught by surprise. "They had one hearing on something that could have a $1.3 billion impact for bars, restaurants and charities," Franke said.
The next day, he said, the measure was amended into a larger spending bill now headed to conference negotiations. Ostensibly, the bill's broader aim is to redesign the games by the deadline. But the Gambling Control Board notes that there are no games that would fit the proposed language requirements. Companies would be taking another gamble that the state would not change its mind again.
And just like that, small bars and restaurants, youth hockey clubs, Lions Clubs, veterans organizations and more than 1,300 other local charities across the state could take a massive hit. A legislative fiscal analysis shows that local bars and restaurants would lose an estimated $29.25 million in revenue. Local wages would drop by $35 million. Local charities, which use some of the e-pulltab proceeds to fund athletic scholarships, equipment, veterans services and a host of other local needs, would lose $33 million a year. E-pulltabs and linked bingo also generate up to $60 million a year in taxes — money the state uses to pay its share of stadium costs.
A little background: Tribes didn't oppose e-pulltabs years ago because, frankly, they didn't think they would provide much competition. A Star Tribune editorial in 2011 noted that tribal gaming interests had signaled they wouldn't fight the new charitable gaming because it was considered less of a threat than a downtown casino or the slots-at-racetracks idea dubbed racinos. E-pulltabs emerged as the consensus option the following year, in part because it was characterized as more respectful of the compacts and did not extend gambling to new venues.
Initially clunky and unsophisticated, e-pulltabs were, in fact, slow to catch on. After a retooling, their popularity has grown exponentially. Tribal gaming interests went to court last year over what they said was a growing similarity to slot machines. But an administrative law judge last May soundly rejected that argument, ruling specifically that the games did not infringe on tribal exclusivity, and noting that "the mere push of a button is far too attenuated to constitute 'mimicking' of a slot machine."
Gov. Tim Walz recently voiced support for the House measure, saying "we have a responsibility to our Indigenous nations who, in good faith, negotiated around those issues of pulltabs." But it's not that simple. There are others who negotiated in good faith: organizations that trusted in the now decade-old sanction of electronic games; manufacturers that invested in new technology; taxpayers who took the state at its word when it assured them that charitable gambling, not public subsidies, would pay stadium costs.
The state has itself tangled in competing promises here, in part because it thought it had found easy money for something it badly wanted: a new stadium. Now it is obligated to strike a fair balance.
Walz should send this poorly vetted legislation back for the broader, deeper consideration it deserves. Too much is at stake for small bars, restaurants and local charities that have come to depend on this revenue.