Editorial: Charitable gambling deserves break from state

by ECM Editorial Board

Hope for a Vikings stadium deal this legislative session waxed and waned this week, the result of irresolute or ornery legislators who seem to reflect the conflicted views of their constituents.But the rush to assemble a stadium funding package did expose a problem that deserves fixing, with or without a stadium package.

Minnesota’s charitable gambling outlets have fought high taxes and dwindling receipts for years. Under a stadium deal forged in the House of Representatives, the charities got much of the relief they sought and the state got its source of annual stadium debt payments from increased charitable gambling revenues.

The deal allows charities to add electronic pull tab operations wherever they operate traditional paper pull tabs. Gamblers would play out of the same “jar,” whether tearing cardboard tabs or touching images on the screen of a portable device kept inside the venue.

The deal also allows electronically linked bingo, which would allow play within a single tavern or through a network of digitally connected bars and restaurants.

If the games offer an 85 percent payback to players, number-crunchers at the Minnesota Gambling Control Board estimate, they will add $72 million a year to charitable gambling activity in the state.

The stadium deal splits that down the middle — $36 million to the state for debt payments, and $36 million to the organizations in the form of tax relief and reform that would cut their tax bills by an average of 29 percent. Among the tax changes is a switch to taxing gross gambling receipts instead of taxing net receipts.

It’s not a perfect stadium solution. It may fall $6 million short right off the bat and if expanded gambling revenue is less than forecasted, backstop measures such as a stadium seat-licensing fee and a ticket tax would kick in.

“If I had it to do over again, I wish nobody had ever suggested we be tied to a stadium,” King Wilson, executive director of Allied Charities of Minnesota, told the ECM Editorial Board.

But someone did suggest it — DFL Senate Minority Leader Tom Bakk, Wilson said — because it seemed a politically viable way in a shrinking menu of options to raise the state’s share of stadium funding.

Charitable gaming is fighting years of erosion. During its early boom phase, the industry was hit with an abrupt tax increase that helped balance the state budget but, Allied Charities says, has never been revisited.

State gambling taxes on charities jumped from $26.85 million in 1989, the year the tax was raised, to $52.63 million in 1990.

Allied Charities also blames the smoking ban, a lowered threshold for drunken driving and the Great Recession for driving down business.

Gross receipts for charitable gambling peaked in 2000 at $1.48 billion (before prizes paid to players). By 2009, they had fallen to slightly less than $1 billion.

The number of charitable gambling operations has fallen in recent years from 1,800 to 1,200, King said.

The erosion is felt in local communities. People have differing views about whether gambling money should go to public purposes, but in the case of charitable gambling, the benefits are some of the most visible and most taken for granted.

Charitable gambling helps pay for fields, for dugouts, for park equipment and police gear. About 30 percent of charitable gambling proceeds in Minnesota go to local governments, according to Allied Charities. Wilson said 95 percent of what his organization in Columbia Heights gives away goes to the school district and the city recreation department.

The stadium package and the charitable gambling solution deserve a final look before the 2012 Legislature limps home. If legislators have another go at the stadium in 2013, charitable gambling should remain on the table.

The high-drama politics may not be what Wilson wanted, but the exposure may help him gain what his members and their communities deserve.

Editor’s note: This editorial is a product of the ECM Editorial Board. The ABC Newspapers are a part of ECM Publishers Inc.

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