Lagging Vikings stadium gambling revenue spotlighted in new state budget forecast

One of the most closely watched numbers in today's state budget forecast may be the projected gambling revenue to pay for a new stadium for the Minnesota Vikings.

Seeing slower-than-expected growth in revenues from electronic pulltab gambling, state finance experts cut their expectations in half in November. Now, officials think revenues will probably miss revised estimates, too. That may boost interest in alternatives at the Capitol and elsewhere.

State deputy revenue commissioner Matt Massman offered insight into how shaky electronic pull-tabs may be when he appeared before the House Commerce Committee last month. He said revenue projections for the state's stadium financing plan were falling short mostly because of how slowly the games were coming online.

"The assumption at the end of session was 2,500 sites in the fall, so as of October, and the assumption is now 2,500 sites by July 1, 2013," Massman said.

As he spoke, there were 111 sites up and running.

Minnesota Gambling Control Board executive director Tom Barrett then told lawmakers that even the state's new expectation would need to be lowered.

"We're probably not going to be at the 2,500," Barrett said.

The latest figures show the state adding just two more sites per day at the time. At that rate, Minnesota would not hit the target of 2,500 sites with electronic pull-tabs until 2016.

Despite such testimony, though, most lawmakers have been reluctant to reopen a hard-fought stadium finance agreement from last spring.

Republican Rep.Tom Hackbarth of Cedar said he plans to introduce on Thursday a measure allowing slot machines at horse tracks in order to bolster state revenue. Regular taxpayers might have to make up the stadium funding shortfall otherwise, he said.

"We are going to have a hole in the budget if the pull-tabs don't bring the money in," Hackbarth said. "We have to have some money from some source. Sure, I think racino is a good supply of money."

Hackbarth's racino plan has in the past failed repeatedly at the Capitol. But less drastic changes to electronic gambling, or other changes to stadium financing, could shape a compromise to get stadium funding back on track.

Pull-tab suppliers say they would be interested in some limited changes, but say it is still too early to judge the electronic games.

Jon Weaver, founder of Express Games, the first company to offer electronic pull-tabs in Minnesota, said, "My first statement would be: be patient. It takes a while to adopt new technology, but once it's adopted, you always say to yourself, 'how did I ever live without it?'"

Others say they think the solution to a shortfall in gambling revenue is to add more gambling options.

Omaha-based International Gamco, a long-time paper pull-tab maker, is poised to start selling its electronic game. Vice president Scott Henneman says International Gamco already sells paper pull-tabs to the state's regular pull-tab distributors, and that using long-established sales outlets may be the key to overcoming resistance to new technology among charitable gambling operators.

"We believe that their relationship with existing charities that's happened over decades — those charities are waiting for a product to be manufactured by our company, but also to be offered by through distributor that they're comfortable doing business with," Henneman said.

Henneman also has what he is pitching as the "killer app" of electronic charitable gambling: a linked bingo game.

John Smolic runs Electronic Game Solutions, creator of the device that will run the bingo and pull-tabs. Smolic said linked bingo in Minnesota will offer five-figure jackpots on games that play out on big-screen televisions in bars across the state.

"The risk reward is huge, versus a pull-tab where you put in $3 or $5, you get a chance at $1,499," Smolic said. "You put in $3 or $5, you get a shot at $25-, $50-, $74,000, whatever it may be."

Several bingo games could be approved by March 18. The state still has time for all the games to ramp up. Finance officials say they are unlikely to sell stadium bonds until this fall, and start paying the stadium mortgage after that.

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