Minn. regulators craft rules on high-tech gambling

Electronic pull tab
Boosters want to put as many as a dozen electronic pull tab terminals in eligible Minnesota bars as part of a digital wireless upgrade of pull tab games. They would supplement, not replace, the paper versions.
MPR Photo/Tim Nelson

Associated Press

ST. PAUL, Minn. (AP) — Regulators overseeing a significant gambling expansion to pay for a new Minnesota Vikings stadium are on the verge of adopting requirements for new hand-held devices coming soon to bars and restaurants across the state.

Among them: They can't resemble video slot machines, they must allow for independent integrity checks, they need to cap the price of each game at $5, and they have to contain safeguards against hackers or anyone attempting to rig games.

The electronic pull-tabs and bingo games are central to a plan to retire hundreds of millions of dollars in public stadium debt. The Minnesota Gambling Control Board could vote later this month on the equipment standards, a crucial step in moving the gambling expansion from the drawing board to reality, perhaps by fall.

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"There is a sense of urgency. Bars want them. Charities want them," said Tom Barrett, the board's executive director.

Minnesota will be the first state to widely offer electronic pull-tabs. It's also gaining pioneer status with electronic linked bingo, where players in multiple locations vie for a common pot of money.

The window for vendors, groups and others to comment on the draft standards ended Monday. Responses reviewed Tuesday by The Associated Press skewed toward the technical but also drew attention to close calls regulators will have to make as they enact the parameters.

A key challenge is how to employ the full range of the touchscreen technology and the allure of animation without creating the feel of a casino game. One requirement for the portable consoles: "Has no spinning reels or other representation that mimics a video slot machine."

Joe Richardson, CEO of Gaming Studio Inc., said legal disputes could crop up over the definition of "spinning" if the games feature symbols that are simply revolving or rotating.

"If a feature has been on a video slot machine or if it might in the future be on a video slot machine, could that not render a similar feature on an electronic pull-tab illegal as mimicking a video slot machine?" Richardson wrote to the board. "These vague terms can be treacherous from a game design, hence, investment, perspective."

Evolving technology adds to the complexity. Barrett said the devices could resemble iPads or smartphones, but there will be a strict prohibition against using them for anything other than pull-tab or bingo games.

External ports, other than those used to power the machines, must be disabled to prevent people from inserting thumb drives, for instance. The central gambling system that transmits information to portable devices must be in Minnesota and have limited, authorized access. Wireless features must include sophisticated encryption features.

Other suggestions asked regulators to more clearly lay out what happens in cases of equipment malfunctions, lost power or hiccups with wireless networks. One possible vendor, Acres 4.0, said players need to know they'll be properly cashed out if something goes wrong.

"Unfortunately we all know that in a network as large as is anticipated in Minnesota each of those failure modes will likely be encountered at some time," the company wrote to the board. "Inability to deal with those failures will cause a significant loss of integrity for the system and state and raise the possibility of some negative publicity."

Those with qualms about the expansion also weighed in.

The National Association of Fundraising Ticket Manufacturers, a trade group for paper pull-tab suppliers, reeled off four pages of concerns. The group's attorney, Mary Magnuson, pleaded with the Gambling Control Board to avoid fast-tracking the standards.

"We believe that a slower and more deliberate process is necessary to ensure that the standards adopted by the board are clear, complete and most importantly, effective in ensuring that the electronic pull-tabs systems ultimately approved for use in this state meet the highest levels of integrity in the gaming industry," she wrote.

Current paper pull-tab games will be offered alongside the electronic devices. Those static cards invite players to tear back cardboard folds to determine whether they've got a winning sequence of symbols.

Cathie Perrault of Northstar Problem Gambling suggested the devices include the capability to flash "periodic messages related to the prevention and education about problem gambling and the state's 800 helpline."

Barrett said the compulsive gambling warnings are a possibility. But regulators draw the line at other messages, such as restaurants advertising drink specials.

In May, Minnesota lawmakers approved financing for a nearly $1 billion football stadium to be built where the Metrodome now stands in Minneapolis. Public money accounts for about half of the upfront construction costs, and most of that share falls to the state.

State leaders were concerned about the appearance of a stadium competing with schools, health programs and other needs for scarce state dollars, so they created a direct link between expanded gambling and the retirement of stadium debt. Under the arrangement, the state is betting that annual tax collections from pull-tabs and bingo would more than double, from $37 million to almost $95 million, when the games are fully implemented by mid-2013. The new technology is projected to push up total wagering from almost $1 billion to $2.3 billion.

Those projections depend first on the games being widely deployed and then on customers playing them. Even before the machines get the formal go-ahead, state officials are working to get buy-in from charities and restaurant owners.

This summer, Barrett and leaders of the Minnesota Licensed Beverage Association have conducted seminars explaining the new games to owners of establishments that may tap into them. The road show has been to Alexandria, Duluth, Rochester, St. Cloud and Detroit Lakes. Stops in St. Paul and Willmar are to come.

Meanwhile, the board has put a halt to another stadium-linked gambling plan: tipboards where winners are determined on the outcome of sporting events. Even as lawmakers considered them, there was concern that federal law would get in the way. The board voted last month not to move ahead on tipboards "until such time that federal restrictions are successfully challenged or removed."