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Pull-tab stadium funding: Minnesota’s headache that won’t go away

State and gaming officials, though, say it’s too soon to panic and that the funding plan for the Vikings stadium eventually will work fine.

“The initial projections were obviously wrong," Dayton admitted Thursday afternoon.
MinnPost photo by James Nord

The Vikings stadium is the headache that won’t go away for Gov. Mark Dayton and state legislators who believed they were done with this billion-dollar project a year ago.

The problem?

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Revenues from electronic pull-tabs  aren’t producing near the revenue that was predicted when Dayton pushed the stadium bill through the process a year ago.

“The initial projections were obviously wrong,’’ Dayton admitted Thursday afternoon. “Now we have to make some corrections.’’

To date, “wrong’’ is a pretty mellow term to sum up the projection situation.

The electronic pull-tabs were expected to have grossed $35 million by this time. But, in fact, the gross from those devices is just $7.5 million.

There were expected to have been 900 sites in the state, with each device at each site grossing an average of slightly more than $200 a day.  In fact, so far there are just 130 sites and state budget officials are lowering their per-device estimate to $100 a day.

Not surprisingly, this has reporters already seeking villains in the story.

Jim Schowalter, commissioner of management and budget, refused to play that game. Rather, he said, a combination of a slow regulatory process and lack of marketing has led to the current situation.

schowalter
MinnPost photo by James Nord
Management and Budget commissioner Jim Schowalter blamed the shortfall on lack of marketing.

At the moment, the favorite target of critics seems to be Allied Charities of Minnesota and its executive director, Allen Lund, who is a little surprised at the fingers being pointed at his organization.

“We were given the job of selling electronics for a stadium but no tools,’’ Lund said.

But Lund quickly adds that he’s not pointing fingers, either. In fact, the biggest surprise to Lund is that people are so quickly deciding that the key funding mechanism for the public’s portion of the stadium is a flop.

There are solutions to the immediate problems, he said. And he also said that the electronic games ultimately will produce more than enough money to fund the public portion of the stadium.

“The big problem is that right now the process is exasperatingly slow,’’ Lund said.

According to Lund, sites have been added so slowly for one major reason: Only two manufacturers and three distributors have been approved by the state’s Gambling Control Board to sell the devices in Minnesota. There are other manufacturers and distributors aching to get into the Minnesota market.

Still, he said, he understands why the process is slow. The background checks on companies selling gaming equipment is thorough. The last thing anyone in any part of the industry wants is a scandal involving a crooked company.

There is another reason that receipts have lagged, according to Lund.

He believes electronic bingo, if it is added to the mix, will be a big revenue spike. Ultimately, bingo will be a bigger revenue producer than the e-tabs, he said.

“Bingo  will be the horse that delivers the most,’’ Lund said. “We believe there are ways to move that forward quickly.’’

Under any circumstance, Lund said, it remains far too early for people to judge the bottom line of electronic gaming.

“There’s no money due this year,’’ he said.  “Panic is way premature.”

In fact, sales of bonds for stadium construction have been pushed back from this spring to Aug. 1 because of the later-than-expected start of construction of the stadium.

What Lund fears is that antsy legislators may develop new gambling games — such as keno — that would be run through the state lottery and bypass charities entirely.  Under the current bill, of course, the stadium and charities each get a taste of the electronic pull-tabs.

It is Lund’s contention that when the licensing procedure speeds up, demand for more machines in more bars will speed up. As more sites offer the e-pulltabs — and bingo — competitive pressure will grow for other sites to offer the games.

Meantime, though, the issue that pols hate and reporters seem to love has returned to the Capitol. Reporters are asking whether the stadium bill will be reopened. (That causes most, including Dayton, to wince.) There are questions about a “Plan B.”

Schowalter said the administration believes “Plan A still works,’’ but he quickly added that revenues are lower than expected.

“But it’s not an issue for today,’’ Schowalter said.

There is one reality that is clear about the revenue trickle.

“The head start [cash in the bank] we’d expected has been trumped,’’ Schowalter said.