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Patrick Condon, Associated Press, Published June 14 2013

Tour touts struggling e-gambling venture

MANKATO, Minn. – As gambling managers for about 50 Minnesota charities dined on complimentary cheeseburgers and fries, boosters of the state’s electronic pull-tab games struggled to make a case that the games are about more than just paying for the new Vikings stadium.

But after pitches from state officials, presentations from game vendors and even prizes from the Vikings, many in the audience remained skeptical. The meeting Wednesday night at the Mankato Eagles Club was one of nine around the state funded by Allied Charities of Minnesota, with another Thursday night in Rochester.

The group is trying to stoke interest and confidence in the electronic gambling options that charitable groups are eligible to offer, but for the most part haven’t.

“Who wants to jump on a bandwagon if it’s headed into the ditch?” said Mary Norgaard, gambling manager for Lake Crystal Fire Relief, which sells paper pull-tabs – but not their electronic counterparts – at two bars.

Like most of her fellow small-town gambling managers, Norgaard said she’s yet to get a single request from mostly older customers for the electronic versions of the game, which shifts the paper pull-tab experience onto iPads and similar handheld devices.

The games have been slow to take off since their debut last September, falling far short of original projections. That forced Gov. Mark Dayton and state lawmakers last month to set aside general fund revenue to back up the state’s roughly one-third share of the $1 billion football stadium planned for downtown Minneapolis.

Jody Wynnemer, gambling manager at VFW Post 1642 in Waseca, was among those still on the fence after the presentations.

“If it will give me more money to put new uniforms on my baseball team, I’m all for it,” Wynnemer said at the meeting in nearby Mankato. “But if it’s just about building a stadium, well, I can’t even really afford to go to a Vikings game, so I might say no.”

Representatives from Allied Charities, the Minnesota Gambling Control Board and the Department of Revenue talked up the games. When one participant asked how many of the operators had tried the electronic games, only six out of about 50 in the room raised their hands.

Two gambling managers who’ve had success with the electronic games tried to build confidence.

“Our net income is up – that’s the bottom line,” said Terry Wheeler, gambling manager for Prairie Ecology Bus, a Lakefield-based mobile science education program that sponsors gambling at several bars in the Mankato area.

Wheeler said electronic sales aren’t replacing paper pull-tab sales, but rather are attracting new customers not interested in the old-fashioned games.

“I think we’re getting some folks that used to go to Indian casinos two to three times a week to stay in town,” he said.

So far, 251 bars and restaurants offer electronic pull-tabs to their customers – a far cry from the 2,000 sites initially projected. That’s compared with about 2,800 establishments that have bins of the small cardboard pull-tabs for patrons to play.

Electronic pull-tabs are appearing in 15 to 20 new places per month, said Steve Pedersen, a state licensing supervisor.

Only three companies have had applications to manufacture the games approved, which happens following background checks of key employees. Three more manufacturers have applications pending.

Jodie Forrey, gambling manager for Govenaires Drum and Bugle Corps in St. Peter, started offering electronic games last year at one of her group’s five gambling sites. She said sales so far have disappointed: “It’s meant a little more income, but nowhere near what was suggested.”

Still, Forrey was intrigued by flashier versions of the games shown at the meeting and said she hoped to make the switch soon. Most of those games weren’t initially available.

“You have to be able to offer a Vegas-style experience,” Forrey said.

Al Lund, executive director of Allied Charities, acknowledged the electronic games have a bad reputation among some charitable operators. He said he’s had to discourage some from actively undermining them to colleagues.

“No one’s forcing these on anyone. And the people that want to offer them should not be looked down on or looked at differently because they want to try something different,” Lund said.

He said he also frequently explains that charities get to keep the actual game profits and that only the tax revenue is earmarked for the stadium.

Lund called the meetings “internal promotion” and said a key step to greater success is stronger marketing to potential players. That’s been nonexistent to date, and it’s not clear who would pay for it.

“I think we’re going to get there eventually,” Lund said. “But how soon that is, that’s the $64,000 question.”