Minnesota gambling regulators approved a new vendor Monday for the electronic gambling games the state is counting on to help pay its share of a new Vikings stadium and expressed optimism that revenues will grow as the tablet computer devices become more commonplace at bars, restaurants, and clubs across the state.
The Minnesota Gambling Control Board on Monday made e-tab Manufacturing LLC of St. Paul the second vendor approved to offer electronic pulltabs in the state. Also Monday, the authority that runs Minneapolis-St. Paul International Airport approved the installation of the machines at bars there.
The games went into operation in September and about 90 venues statewide currently offer them, but revenue from the new games has been running below expectations. Gambling board and industry officials said they expect the numbers to grow quickly as more charitable gambling operators get off the sidelines and into the game by rolling out the electronic version of the old-fashioned paper pulltabs.
Revenue from the games is now projected at $16 million this year instead of the original $34 million. The state is counting on the money to cover its $348 million share of the $975 million stadium.
"It would be true that to date we've all been slightly disappointed at the rollout," acknowledged Al Lund, executive director of Allied Charities of Minnesota, the trade association for groups that finance their services through charitable gambling.
Jim Welbourne, an operating officer at e-tab, said his company hopes to place 6,000 machines at 600 locations within a year, starting with at least three venues this Thursday and Friday. He also said the company is optimistic the gambling board next month will approve its application to run linked bingo games that can pay high jackpots, and he said those games will run on the same machines, adding to their appeal. And he said his company's machines are more rugged than the iPad-based games now in use.
"We built it for the bar environment," Welbourne said.
3 Diamond Corp., of Shoreview, the state's largest distributor of paper pulltabs, will distribute e-tab's games. Spanky Kuhlman, 3 Diamond's vice president, said a lot of his customers were waiting to see how the games would work, whether they'd be profitable and for his company to offer them.
"I think we'll see a big influx now," Kuhlman said.
Tom Barrett, the Gambling Control Board's executive director, said several other vendors and distributors have applications pending or have called to express interest.
"Those are good indicators there should be plenty of vendors and opportunity for charities," Burnett said.
The Metropolitan Airports Commission's decision Monday to allow a pilot project in six bars at the Twin Cities airport starting Jan. 2 is bound to boost revenues. The airport, which serves 32 million passengers a year and is a major hub for Delta Air Lines, already is the state's largest volume retailers of lottery tickets and says it will be the first airport in the United States to offer electronic charitable gambling.
A key reason for the slow start is that before Monday there was only one approved vendor, Lund said, adding that the first company offers only electronic pulltabs, not linked bingo as e-tab eventually will do.
Another reason is that many charities and establishments that offer traditional paper pulltabs took a wait-and-see attitude, said Frank Ball, executive director of the Minnesota Licensed Beverage Association, which represents 3,800 bars across the state and a leading promoter of the electronic games as a source of stadium money.
But the bars that started offering electronic pulltabs early have benefited from higher patronage, which helps the charities that run the games, and these bars are also collecting three times as much rent off their electronic games as they did off paper pulltabs, he said.
Genny Hinnenkamp, gambling manager for the Irving Community Association, a charity that offers electronic pulltabs at five bars and restaurants in Duluth, told the board the new games are attracting strong player interest and are helping those establishments compete with others just across the state line in Superior, Wis.
Now the industry needs to do a better job of marketing the new games, Ball said, adding that his group will be working with Allied Charities, bars, manufacturers and distributors to promote them.
Ball said lawmakers who've expressed concern about whether electronic gambling will cover the state's share of stadium costs don't need to worry.
"They're not down," Ball said of those revenues. "They're just not reaching their potential yet."