Minnesota reboots e-gaming meant to pay for Vikings stadium

ROSEVILLE, Minn. - The game plan called for electronic pull-tabs to score up to $350 million for the Minnesota Vikings' controversial billion-dollar stadium, now under construction.

Yet Gov. Mark Dayton, a Democrat, and state legislators' projections turned out to be more overly optimistic than any fan's preseason expectations, leading to an industry shake-up and the departure of the Las Vegas player that provided most e-games.

"The one manufacturer, disappointed as I think everybody was as far as activity with the electronics, decided we just can't get this industry to embrace it for whatever reason," said Tom Barrett, executive director of the Minnesota Gambling Control Board. "A lot of it has been let's wait and see what happens. Those that have elected to jump in, and are willing to learn and understand, are doing very well."

When Minnesota became the first state to field electronic pull-tabs in bars and restaurants in 2012, the results left as much to be desired as the NFL team's performance.

"When you tie financial performance to a specific user project, the stadium, and a project that's particularly not politically popular in the state, now when you're stuck onto that and this is going to pay for it, and you have a bunch of people waiting for something to fail, they don't give it time, right?" said Jon Weaver, CEO of Pilot Games, which switched from distributing to manufacturing the electronic games.

E-tabs are electronic facsimiles of paper pull-tabs, a popular billion-dollar game in Minnesota played on handheld tablets with touch screens. Rather than raising $35 million a year in tax revenue for the stadium, however, e-tab games racked up just $15 million in sales the first year, putting up a goose egg on the state scoreboard. In subsequent years, e-tabs were projected to raise $58 million for the stadium fund.

Legislators scrambled to find another tax to pay for the state's share of the stadium, leveling a one-time $26.5 million cigarette tax on distributors and $20 million a year in taxes on out-of-state corporations.

While ineffective marketing and resistance among proprietors to a new form of gaming played a big role in the underwhelming results, it also became apparent the Vikings' image problem with many Minnesotans predates the current backlash to superstar running back Adrian Peterson's family issues.

"There are still plenty of people, if you talk to them in the bars and restaurants, that say they associate electronic pull-tabs and linked bingo with paying for the stadium, and they don't like that," said Al Lund, executive director of Allied Charities of Minnesota, which represents charities that benefit from gambling in bars and restaurants.

Currently, 180 bars and restaurants offer e-tabs, down from a peak of 300 out of 2,800 statewide. Despite a troubled rollout and negative media coverage, many of those in the game get good results.

"It's like anything, you have to sell them. You have to kind of guide people, know how they work, know what you're selling," said Margie Koivunen, owner of the Roosevelt Bar in Eveleth, frequently among the top-10 sellers of e-tabs. "That's the big thing, it's the same thing with pull tabs. You have to have games that people want to play. That's huge."

So what are the odds that e-tabs v.2 will be a hit? Depends in part on persuading players that all forms of charitable gambling, not just e-tabs, go to paying for the Vikings stadium. The first $37 million of charitable gambling taxes goes into the general fund. Additional charitable gambling tax revenue goes to the stadium fund with an expectation e-tabs would account for most of it - or not.

"We knew there were issues and problems that were impeding the development of the industry in the state and we kind of learned it the hard way from the ground up," said Weaver, who's now developing and selling new electronic games. "That's why we thought we could do this reset, otherwise it wouldn't make much sense."

Insiders expect the state to soon announce about $5 million will go into the stadium fund for the first time on the strength of growth in paper pull-tabs. The industry still faces a formidable sales job with charities to increase sales among players.

"There's not as much management, there's no storage issues, there's all kinds of ways that electronics over time will be more profitable than paper," said Lund. "So basically, what we're saying, is it's worth a look."