The Free Press, Mankato, MN

October 6, 2012

E-gambling about to plug in

By Tim Krohn
Free Press Staff Writer

MANKATO — A few bars are beginning to roll out the new electronic pulltab devices while businesses and charitable groups feel a mix of anticipation and wariness.

“Our attitude is let’s give it a shot and maybe it’ll help out everybody,” said Mark Healy, gambling manager for the Mankato-based Community Charities of Minnesota.

Healy, whose group runs 41 charitable gambling sites around the state, was initially critical of the proposal to legalize electronic gaming with anticipated added revenue going to help pay for the new Vikings stadium. Healy argued at the time that the proposal veered from the idea of charitable gambling funding charitable organizations.

But now that it’s approved, Healy said charitable groups are hoping there will be a big enough increase in what have been flagging gaming revenues to benefit charities.

“Most all of our sites are eager to get (electronic pulltabs),” he said.

The games are unleashing the biggest expansion of charitable gambling in 25 years and opening up electronic gaming on a scale not seen anywhere else in the country.

Bigger payouts

The games will push up payouts and games such as electronic bingo could have prizes of several thousands of dollars.

Healy, who played one of the new pulltab devices at O’Gara’s bar in St. Paul, said they’re fun, easy to use and entertaining.

“I put down 20 bucks and played 20 or 30 minutes. Twenty bucks of paper pulltabs would last you about 30 seconds,” he said. “A lot of the attraction is the entertainment of it.”

So far, only a handful of sites have the new pulltabs — which operate on iPads — but none are believed to be available yet in this area. That will change quickly as the sole distributor of the games has worked out some small kinks in the system and bars are eager to get them.

Still, not everyone is ready to jump on board the e-gambling bandwagon.

“We’re not interested. No way at all,” said Paul Ulmen, gambling manager of the Morson Ario in Mankato.

He said pulltab revenue at the VFW Post 9713 has fallen dramatically over the years as more Indian casinos opened. “I used to deposit monthly net receipts of $35,000. Now $10,000 is a good month.”

Statewide, charitable gambling hit a high of $1.5 billion annually until falling to its current level of $1 billion.

Charitable gambling proponents expect that bars or clubs such as Morson Ario that draw an older clientele will be less likely to put up the investment for e-gaming. They hope the iPad-based games will draw new, younger players.

And as prize amounts increase, interest may grow. The size of prize payouts can increase if more people in one bar are playing the electronic pulltab games.

Healy said prize payouts will jump dramatically when the electronic-linked bingo games are rolled out. Bingo players across the state would be linked, which could push payouts for a winner to several thousand dollars.   

The Gambling Control Board projects that 2,500 of the state's 2,800 gambling sites will install the electronic pulltabs, and that 1,500 will install the new electronic linked bingo. The bars and other gambling sites have to pay for the devices. They in return get up to 15 percent of gambling revenues and profit from having patrons buy more food and drinks while gambling.

More games expected

Charities that do charitable gambling pay a sliding-rate tax to the state based on their gambling revenues. Healy said Community Charities of Minnesota pays 36 percent in state taxes.

That rate won’t increase because of the Vikings stadium deal. The state is hoping the electronic games will generate as much as $1.2 billion more in gambling revenues with the tax revenue from that increase going to the stadium.

 “I don’t know if there’s an extra $1.2 billion out there or not,” Healy said. “But Minnesotans like to gamble.”

 Indeed, the state is No. 1 in charitable gambling.

Healy’s group last year donated $155,000 from gambling operations for a wide variety of youth programs and other charities.

So far, one company — Express Games MN — has exclusive rights to sell the new e-games after winning approval from the Gambling Control Board.

The company plans to deploy up to 10,000 gaming terminals in the next six months.

Other companies are expected to win approval to get into the booming e-gaming business as they develop new games.