Monthly electronic gambling revenues tick up from rock bottom

MPR Photo/Tim Nelson

Maybe electronic pulltabs have touched bottom.

Data from the Minnesota Gambling Control Board shows that sales of the games ticked up in August, for the first time since March. It’s not the exponential growth the state thought it would see in the first year of the games (they were expected to be nearly a rival to tribal gambling estimates ), but after a 27 percent slide since the start of the baseball season the curve is bending up again.

Aug chart

The change comes just a couple weeks before the one-year mark for the games. They debuted on September 18th last year, to much promise — a promise that’s gone unfulfilled so far.

They were supposed to take $1.2 billion in bets, pay out $1 billion in prizes and throw off enough gambling taxes to pay the mortgage on the state’s share of the Vikings stadium.

They’re going to take in about $20 million in bets instead. That’s about 1.5 percent of the initial estimate. Not quite 2 cents on the dollar.

The state’s share is even smaller.

Allied Charities of Minnesota executive director Al Lund says charities pay an average of 22 percent in taxes on their net receipts –that’s what’s left AFTER prizes are paid out. Do the math: at an average prize payout of 85 percent, that means the state and charities have about $3 million left to split between them. That puts the state tax take at about $665,000 for the first year of e-pulltabs.

It’s a long way from the more than $30 million a year the state was hoping the games would put toward the stadium.

Lund says its actually a relief that the stadium debate has moved on, and that gambling operators can focus on their operations without the pressure of the Viking stadium. “”We believe the numbers with electronics will grow, although if we expect different results and improved results, we’re going to have to do things differently… We have to understand better what the people that are having success are doing, that other people in the business are not doing.”

That said, it’s faint glimmer if it IS sunlight ahead for electronic gambling.

Two things:

First, a key metric in measuring demand for the games, the per-day-per-machine gross sales, inched up just $3.27 in August.  That’s still $178 short of what the state thought the yield would be per device. You’ve got to have some pretty keen eyesight to see the difference.

Aug devices

 

Second, there’s another piece to this electronic gambling puzzle that no one talks much about. Electronic linked bingo was supposed to be the catalyst for the pulltab boom, offering 5-figure jackpots that would bring players flocking to the gadgets, to play whatever was offered. The estimated annual linked bingo sales were pegged at $227 million. But for the first full fiscal year they were legal? $38,053. That’s less than .02 percent of the projected total.