Plans for tipboard gambling get punted

An example of a tipboard game, a form of raffle connected to professional sports scores, shown during a Minnesota House committee hearing on Monday April 2, 2012 at the State Capitol.
MPR Photo/Tim Nelson

The plan to pay for the state share of a new Minnesota Vikings stadium using proceeds from electronic pull-tabs is inching forward. However, plans to legalize sports-themed tipboards have officially been shelved, as a nationwide legal battle over sports gambling plays out.

Tipboards are a lesser-known part of the gambling expansion approved by the Minnesota Legislature this spring.

Electronic pull-tabs received great attention during the stadium debate. They're expected to rake in $2.3 billion annually, and pay for about a third of a Vikings stadium. Tipboards, a lower-tech form of gambling, were a key part of the deal.

"There are going to be places that the electronics just won't be in for whatever reason, where [tipboards] can be sold virtually anywhere and everywhere," said King Wilson, head of Allied Charities of Minnesota, the trade group for the state's non-tribal gambling operators.

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Tipboards are essentially small, paper-based lotteries, usually with 100 or fewer tickets. Winners are picked by a hidden number. Those tipboards are legal.

But Minnesota lawmakers said winners could be chosen based on the digits in the score of a football game or some other semi-random number. That kind of tipboard gambling was banned by federal law 20 years ago.

Tom Barrett, executive director of the Minnesota Gambling Control Board, explains the effect of the federal law. "It basically put a stop to allowing any individual, but also any state, to license, conduct, do anything in regards to wagering based on direct or indirect — these are the key words — the outcome of a sporting event involving amateur or professional athletes," Barrett said.

Stadium concept
The Minnesota Vikings released this concept of a new stadium in downtown Minneapolis, April, 2, 2012. This concept depicts a night scene incorporating the downtown skyline and events surrounding Vikings game days.
Courtesy of the Minnesota Vikings

Based on that, the gambling control board last month rejected the tipboard provision in the stadium bill.

Technically, the problem isn't about gambling. It's about taxes.

Lawmakers setting up the electronic pull-tab plan also wanted to give charitable gambling operators a tax break, but in the end, that break was not enough of an enticement. So lawmakers offered tipboards as another revenue source for charities.

Projected to bring in $455 million each year, tipboard gambling was envisioned as a lucrative enhancement to what charities considered a disappointing deal for electronic pull-tabs. And there were to be no gambling taxes on tipboards.

Rep. Morrie Lanning, R-Moorhead, was the bill sponsor in the House and says tipboards were a consolation, of sorts.

"We certainly understood it made this far more acceptable to the charities," Lanning said.

Federal law actually allows sports betting in five states, and others, like New Jersey, are challenging the exemption in court. They want outright sports betting, like in Nevada. Some in Minnesota suggested the state ought to simply sanction tipboards and wait for the federal government's response.

Now, because of the gambling control board's June 18 vote to table tipboards, that won't happen.

Since they would be tax-free, tipboards were not considered a funding source for the stadium, at least not directly. But without the compensation from tipboards, some charities may not adopt electronic pull-tabs or the bingo that the state is counting on.

"All the electronics are going to do is put all the charities in a higher level tax bracket," said Shawn Donahue, gambling manager with the Spring Lake Park Lions, which sells paper pull-tabs in four suburban locations.

"These tipboards were something for the charities, for us to maybe make a buck with so we wouldn't mind paying those higher taxes," Donahue said.

The amount of revenue brought by pull-tabs remains unknown for now. Officials say they are probably months away from formal approval and distribution to Minnesota bars and restaurants.