A leading Democratic state lawmaker said Wednesday he is growing more concerned about the reliability of tax revenue from electronic gambling machines that is supposed to help pay for construction of a new Minnesota Vikings stadium.
"I'm more concerned than I was before the hearing," said Rep. Joe Atkins, DFL-Inver Grove Heights, after the House Commerce Committee - which he chairs - met to review the recent rollout of the electronic pull-tab games in bars and restaurants.
Tax revenue from those games is supposed to fund the state's $348 million share of the $975 million Vikings stadium slated for downtown Minneapolis. But the tax revenue from the games, which started to become available in September, fell short of projections by $18 million through the end of 2012: while $35.2 million was projected to come in, the games returned only $17.2 million in tax revenue.
Backers of the new games said they need time to get more popular and expand to other bars.
"We would ask for your patience," said Allen Lund, executive director of Allied Charities of Minnesota. Legal gambling in bars is operated by Minnesota charitable organizations, from youth sports clubs to veterans groups. "When all the distributors who want these products have it to sell, those numbers will go up exponentially. If we could get some patience, we would appreciate it."
Atkins, who voted for the Vikings stadium plan when the Legislature approved it last spring, pointed out that lawmakers have only a few months if it becomes necessary to retool the bill. He said it was still too early to make that call, pointing out that the stadium bill did include backup revenue sources in the form of a sports-themed lottery and a stadium suite tax.
But Atkins also said he believes that even recently downgraded revenue projections on the games are still too optimistic.
State gambling regulators had initially projected that the games would be available at 2,500 sites around the state by October of last year. But today, they are only available at 120 sites; the 2,500 goal has been pushed back to this coming July.
"I think at this point that 2,500 by July seems very aggressive," Atkins said.
Tom Barrett, executive director of the state's Gambling Control Board, said charitable organizations have been slow to sign on to the electronic games because they are faithful to longtime distributors of paper games. He predicted that interest would accelerate once his agency approves more distributors to distribute electronic games, beyond the two that have been approved.
So far, the availability of the electronic games has not lessened the popularity of traditional paper pull-tabs, which some had predicted. Barrett said sales of paper games rose in the last fiscal year and are on track to rise another 8 percent in the current one.
Barrett also pointed out that little has been spent so far on marketing the new games and he predicted a boost in gambling activity when the first distributors are approved to offer an electronic bingo game that charities believe will be popular.
The groundbreaking for the new stadium is supposed is tentatively set for October 2013, with a hoped-for opening by 2016.
Atkins instructed Barrett to apprise lawmakers on a regular basis of revenue collections on the games. He pointed out that the current session will end in May.
"Our window of opportunity, if changes become necessary, closes in four months," Atkins said.
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