Electronic pulltabs: what was Minnesota thinking?

MPR Photo/Tim Nelson

The Star Tribune’s Jean Hopfensperger has a look at those initial revenue projections that the Legislature was counting on when it passed the stadium bill last year. The story details the circuitous route the state took to putting a number on what it could expect from the new games.

Turns out, the only people who would hazard a guess were the suppliers of the games themselves, and now that guess is proving distressingly off — a $100 million per month industry is looking more like a $2 million a month industry for now.

That’s despite state assurances about the projections last year. The revenue department even put out a charity-by-charity estimate of the likely gains for gambling operators. “They’re reasonable, they’re actually conservative in some ways” said revenue commissioner Myron Frans at the time. “But they are a projection.”

Even the charities at the time didn’t believe the numbers. Gov. Mark Dayton downplayed the doubts, but his administration now may have to come up with a Plan B.

UPDATE: Dayton says he didn’t know about the basis of the gambling revenue estimates. Maybe revenue commissioner Myron Frans told MPR in 2011, but not the governor, that the revenue forecasts were based on gambling industry estimates. Here’s what Frans told MPR’s Elizabeth Dunbar, 16 months ago:

The state of Virginia is expected to implement electronic pull tabs next year, but even when it’s up and running it will only take place in bingo halls and social clubs — not regular bars. Idaho has a pilot video lottery system, and Florida has some video pull tab and video bingo machines similar to the ones Minnesota would use.

But none of those states are very good comparisons for Minnesota — a top charitable gambling state.

“They’re different systems and they’re not on the same level as ours, so it is hard to estimate,” Revenue Commissioner Myron Frans said. “We take information both from the industry and from our economic model and try to predict as best we can.”

Frans said he believes the $42.7 million estimate is conservative. But he acknowledges that sales taxes and revenues from license fees have both been easier to predict.