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Stadium e-pulltabs: With ‘snowstorm’ coming, are we stuck with a broken ‘snowblower’?

Worried about a funding shortfall, Rep. Joe Atkins wonders whether the state needs a backup “shovel” to fund its share of the stadium.

Currently, establishments can’t replace paper pulltabs with e-pulltabs and can’t bring in e-pulltabs unless they also offer paper pulltabs. Should those restrictions change?
Allied Charities

It was a strange sort of meeting, in which members of a House committee tried to talk about Vikings stadium funding without really talking about it.

Instead, members of the House commerce committee on Tuesday talked in hazy, big-picture terms about the performance of electronic pulltabs, which are to generate the revenue necessary to pay for the public portion of the $1 billion stadium.

“My concern is that electronic pulltabs are not performing as well as we expected,” said committee chairman Joe Atkins, DFL-Inver Grove Heights. “When you have a snowstorm coming and your snowblower is not working, it’s good to have a shovel.’’

In this case, that coming “snowstorm” refers to the state obligation to pay off Viking stadium bonds.

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That non-working “snowblower’’ refers to the poor performance of the electronic games, which are delivering revenue far below expectations.

Plan B?

That  “shovel” would be a Plan B.

Atkins tried to turn the Tuesday afternoon meeting into a conversation among committee members. He wanted to avoid the “I told you so’’ rhetoric that has become a part of many meetings about the funding and the stadium.

“We’re not trying to roll anyone,” he said. “We just want to think on it.”

 Most legislators, however, didn’t seem very interested in thinking that hard about the coming snowstorm:

Should there be more marketing/advertising? (Shoulder shrugs.)

Should more e-tabs be offered at the airport? (Yawns.)

Currently, establishments can’t replace paper pulltabs with e-pulltabs and can’t bring in e-pulltabs unless they also offer paper pulltabs. Should those restrictions change?  (There were looks of mild curiosity, but no discussion.)

Perhaps the most interesting revelation of the session was that Gov. Mark Dayton’s chief of staff, Tina Smith, has met with Minnesota Allied Charities, the umbrella organization of charitable gaming in the state.

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Not surprisingly, that alliance is trying to paint as rosy a picture of the electronic games as possible. The last thing supporters of charitable gaming want is more competition. For example, there have been rumbles in the corridors of the Capitol that the Dayton administration will push for a special Vikings stadium lottery game for backup funding.

The charities don’t want that. On the other hand, at the committee “conversation” Tuesday, Allen Lund, executive director of Minnesota Allied Charities, said the organization would be OK if a memorabilia tax was passed to support stadium funding.

“A memorabilia tax does not look punitive to charity,” Lund said.

‘A hole next year’

Lund went on to say that although the returns from e-tabs, and eventually e-bingo, will meet expectations, “there probably will be a hole next year.” (Translation: The revenues will not suddenly start swinging upward, although Lund and Tom Barrett, who heads the state’s Gambling Control Board, both continue to say the games eventually will meet expectations.)

Ultimately, there may be a bigger issue surrounding charitable gambling in the state than funding a stadium.

Some of the reps at the “conversation” expressed concern about the health of the golden goose that is charitable gambling. That goose – the old-fashioned paper pulltabs — puts $112,000 a day into the state’s general fund, according to Lund.

But such reps as Tom Anzelc, DFL-Balsam Township, are concerned that the heavy tax structure is going to undermine the games.

“This was a great thing in year one [of charitable gaming] and year seven or eight,” said Anzelc. “Then, we decided we had to regulate it more heavily, then tax it more heavily. … This whole thing has gone in a different direction.’’

The big change in the tax structure came in 1989, when the state stopped simply taxing profits on charitable gambling and started taxing combined receipts. 

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If, for example, a tavern sells $1 million in pulltabs a year, $850,000 goes to winners, with the remaining $150,000 taxed at a rate as high as 36 percent.  Legislators are concerned that the huge tax bite is discouraging some large charities from participating in gaming any more. The returns don’t justify the headaches.

The charities long have been pushing for lower tax rates. But of course, lower rates would mean less revenue in the short term — and a snowstorm is coming.