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Reality Check: E-Pull Tab Revenue Projections

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ST. PAUL, Minn. (WCCO) – There’s a lot of revisionist history going on at the Capitol about those pull tab revenue projections — numbers that Gov. Mark Dayton says no one knew were wildly inflated.

But that’s not exactly true, according to lawmakers who tried to sound the alarm.

Many lawmakers were skeptical about pull tabs from the very beginning, even when top state revenue officials said it would eventually generate $66 million, or more, every year.

At a stadium Senate hearing last April, Minnesota Revenue Commissioner Myron Frans said that his level of confidence in the pull tab revenues was, on a scale of one to 10, at “about five…probably an eight.”

“We feel very strongly that this is a reasonable, and conservative estimate in terms of the revenue that will be generated,” Frans said then.

But the numbers were wildly off base. For 2013, state officials first estimated $35 million in revenues.

Now, they’re guessing $1.7 million.

Despite repeated attempts by some lawmakers to flag it, the Democratic governor now says no one knew how faulty the projections would be.

“If they misunderstood the situation, they have no one to blame but themselves,” Dayton said. “And I have no one to blame but myself.”

But many lawmakers did have access to different information.

An in-depth report, circulated by supporters of casino gambling, described electronic pull tab devices as “unproven technology in terms of its market potential.”

The report, titled “Minnesota Charitable Gaming: Proposal for Funding Vikings Stadium“, said: “There is no precedent in charitable gaming for such a dramatic increase [in revenue], and all trends have for the past 20 years been in the opposite direction.”

The report concludes: “Electronic pull tabs have not been implemented anywhere in the United States, so there is no basis to the revenue forecast.”

In addition, lawmakers who supported slot machines at horse racing tracks — called Racino — cited studies in Iowa indicating more problems with e-pull tabs.

Rep. Tom Hackbarth, (R-Cedar) said he tried to warn lawmakers — and the governor — about the faulty projections, but he says they ignored it.

“I think everybody knew,” Hackbarth said. “Everybody knew that it was not going to generate that kind of money, but they needed some sort of revenue source to sell the stadium issue.”

He said he believes the Legislature may have to re-open the Vikings stadium bill to fix the funding problem.

On the other hand, Dayton said it’s “premature” to push the “panic alarm”.

He said he believes the pull tab revenues will eventually come around, and meet expectations.

Here are some of the sources that we used for this Reality Check:

Pull Tab Reality Check March 2, 2012 (Additional sources included)

April 24, 2012 Senate Finance Committee

Charitable Gaming Study

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