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One Moment, Please... Minnesota’s gambling problem


Fri, Apr 19th, 2013
Posted in All Commentary

By Jason Sethre

Publisher

Fillmore County Journal &

Olmsted County Journal

Cell: 507-251-5297

jason@fillmorecountyjournal.com

Well, well, well. It looks like the Minnesota Vikings e-pulltabs funding projection miscalculation trumps what I thought was the worst decision ever made that revolved around the Minnesota Vikings.

Remember our trade back on October 12, 1989, that involved 18 players and draft picks between the Dallas Cowboys and the Minnesota Vikings? The Herschel Walker trade. The Minnesota Vikings have been the laughing stock of the NFL ever since, and I’m speaking as a loyal Vikings fan. We literally set the Dallas Cowboys franchise up with a Super Bowl dynasty. But, that’s in the past. Maybe I’ll get over it some day. Or, maybe I’ll just save that story for my grandchildren.

The problem

We need $1.1 billion dollars to cover the cost of the new Minnesota Vikings stadium, and it looks like the original business plan is failing. The e-pulltabs concept that is suppose to generate $350 million is not working the way state legislatures and supporters like Governor Mark Dayton had hoped it would.

Why is it not working? Well, where do we begin?

The goal was supposed to be 15,400 e-pulltab machines in 2,500 licensed establishments. Today, there are a little over 200 licensed locations participating in the e-pulltab program. The projections by the Minnesota Gambling Control Board showed an average of $225 per day, but the results have been a dismal $91 per day since October.

Did you realize that when someone plays paper pull tabs and they spend $40 on pull tabs they play them all the way through, win or lose. With e-pulltabs, a customer can put $40 worth of credit into the machine and then cash-out at any time. So, if a customer wins $200 on their ninth e-pulltab try, they can cash-out and the remainder of their dollars will be refunded as part of the cash-out process. Why wouldn’t you have to play e-pulltabs the same way you play paper pull tabs? If you pay $40, you have to play the entire amount. You can’t get a refund on regular paper pull tabs if you win early in the process of tearing into them. You have to play them until their done.

So, given that the aforementioned might actually encourage people to play e-pulltabs even more, why are they not picking up more customers?

Well, another reason relates to funding from e-pulltabs versus paper pull tabs. The local fire departments, Lion’s Clubs, American Legions and many other organizations in communities all throughout the state make money off of paper pull tabs. Switching dollars from paper pull tabs to e-pulltabs actually takes money away from local organizations that put their dollars right back into the community with earmarked projects. So, essentially, the state is asking people to switch their funding support from local organizations to the Minnesota Vikings stadium fund. Hmmm, what do you think people are going to do? They are going to think ‘local’ support first.

And, there must be an assumption at the state level that if you add another gambling option with e-pulltabs that people are just going to start spending more. I would assume that the gambling industry is no different than any other industry. It’s all about market share. Just because you add another option doesn’t mean that consumers are going to spend more money. If consumers spend their money on e-pulltabs then they won’t be spending those dollars on paper pull tabs. It’s robbing Peter to pay Paul.

Our state government went into this business plan with expectations of 100-percent success. Meanwhile, if you ask most private sector business owners, they will tell you that you should establish your cash flow budget based on 70-percent of expectations. And, that may be high for some types of businesses. Plan for the worst and hope for the best. That’s how most private sector entrepreneurs think.

Nope. Not our state government. Plan for the best, and hope for the impossible. That’s the definition of our e-pulltabs plan.

The irony

Years ago, many cities owned and operated their own municipal liquor stores (there are still a few out there), while also maintaining a city full of law enforcement. Interestingly, alcohol is involved in many domestic violence issues along with DUIs. So, the irony comes in the form of the city selling the alcohol and then employing law enforcement to contend with a problem in which they are contributors.

OK, here’s my swift analogy. Our wonderful Minnesota state government expends resources on administering gambling programs as a manner of funding state budgeted efforts such as the Minnesota Vikings Stadium. Meanwhile, our state of Minnesota spends boatloads of money on human services to contend with gambling addictions and all of the calamities that come with that addiction. So, our state seeks to generate revenue from a source such as gambling of which creates challenges that can only be met with more state funding.

Our state creates a problem in which it then must spend money to resolve. Intelligent.

My solution

Raise our taxes! Yes, every Minnesotan loves the Vikings as much as Wisconsinites love their Packers. So, raise our taxes. Yeah, right. When the Vikings win a Super Bowl, I’ll support that idea. Otherwise, let them join the Lakers in California or the [North] Stars in Texas.

Personally, I don’t think owner of the Minnesota Vikings, Zygi Wulf, has enough skin in the game for funding this stadium deal. We are putting a lot of eggs into the Vikings basket as taxpayers, and meanwhile scoffing at the idea of funding the Destination Medical Center? Wow, sounds like we have our priorities figured out here in Minnesota.

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