Sales of electronic pulltabs have increased 500 percent in the past two years in Minnesota, according to the state Gambling Control Board. Players spend more than $35 million a month on the games at bars and restaurants across the state—more than was sold in all of 2015—and sales could top $325 million this year, regulators said. In the fiscal year ending last June, the state collected a record $63 million in gambling taxes from electronic and paper pulltabs, bingo and other charitable gambling.
E-pulltabs launched in 2012 as a way to pay for the $1.1 billion Minnesota Vikings stadium. Budget Director Myron Frans, who promoted e-pulltabs to lawmakers, said, “I was right. I was just a little bit slow.”
Now, thanks to e-pulltabs’ surprising surge, Minnesota’s charitable gambling industry generates nearly $2 billion a year. As a result, the state’s previously nearly empty stadium reserve account is projected to have a balance of $120 million balance by 2021.
One of the first states to sell electronic pulltabs, Minnesota was hoping to receive $35 million or more in taxes from them each year. However, in the first year, the state made exactly $0, sending legislators scrambling to find a way to cover the state’s $348 million share of stadium payments. They added a one-time tax on cigarettes and closed a corporate tax loophole worth $20 million a year.
Jon Weaver, an e-pulltabs vendor, said the games’ initial failure was due to the clunkiness of the early games, ill will toward publicly funding the new stadium, weak marketing and a preference for the familiar paper games. “If you build a business model based upon changing people’s behavior they’ve been doing for 25 to 30 years, it’s not going to work. In the first six months, you knew that was not going to happen,” Weaver said.
Gambling Control Board Executive Director Tom Barrett expressed surprise that sales of the traditional paper games have not slowed down. He said e-pulltabs could continue to grow since they’re sold in just three out of five sites statewide.
