Once a flop, e-pulltab gambling quietly rebounds

Electronic pull tabs
A patron plays an electronic pulltab machine at The Pines Bar & Grill in Maple Lake, Minn., Sept. 11, 2013.
Jeffrey Thompson / MPR News 2013

Tucked away in southwest Minnesota, Windom's Phat Pheasant Pub isn't much to look at from the outside. Inside, though, the bar is pretty much the world capital of electronic pulltabs.

Gamblers at the roadside pub put down an average of more than $4,200 a day last month — more than three times what gamblers were betting there in October last year, and more than anywhere else in Minnesota.

It's the epicenter of an e-pulltabs industry that a year ago was left for dead.

• Sept. 2013: Why electronic pulltab gambling flopped

The electronic online games were once pitched as easy money makers — so much so that they'd pay the taxpayers' share of the new Minnesota Vikings stadium. But the business quickly stumbled. Bar owners wrote off e-pulltabs as not worth the cost and hassle to install. Gamblers said the electronic games just weren't that much fun.

Now, though, there are signs of a turnaround. New games and better technology are driving a player surge at the Phat Pheasant and other venues across Minnesota. Average daily revenue for the machines was up nearly 50 percent through Halloween.

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"From August 2014 until today, we've seen 100 percent increase, from $1 million in sales to $2.1 million in sales projected for November," said Jon Weaver one of the first vendors to bring e-pulltabs into Minnesota in 2012. His second try, Pilot Games, now runs about 60 percent of the games taking bets in Minnesota.

Rory Johnson at the Phat Pheasant
Rory Johnson points to a winner on an electronic pulltab game at the Phat Pheasant in Windom, Minn. The bar takes in more e-pulltab bets than anywhere in the state.
Mark Steil / MPR News

Two years ago, the devices were projected to take $225 in bets a day. But the best games were taking in less than $60 a day this summer.

In August, however, Pilot's new games took in an average of $240 a day for August, according to data from the Minnesota Gambling Control Board.

Weaver credits better technology, a steady stream of new and novel games and a shift to sales through existing distributors, rather than trying to sell new games through a new supplier.

The money is still a far cry from the $100 million a month that the state was hoping for, so corporate taxes will still pay its stadium bills for now. Projections of 15,000 games in 2,500 bars are even farther off. The games are in less than 200 bars now and aren't likely to replace the traditional paper pulltab games.

Keith Franke in his bar
Keith Franke says he's seen a noticeable uptick in gambling at his bar since new electronic pulltabs came online in August.
Tim Nelson / MPR News

Good sales, however, are getting attention and may help spread the games more widely.

Keith Franke, who owns Franke's Bar in St. Paul Park and is also the city's mayor, wouldn't talk numbers but said he's seeing a boost in his bottom line since the newest e-pulltabs arrived.

"The Lions Club brought it up to me and said, 'You know, do you want to give these a shot?' And as soon as they came in the customers loved them right away, and it's just been a run ever since," said Franke, whose bar sits in the town's former blacksmith shop in the shadow of the Northern Tier Energy oil refinery.

Back at the Phat Pheasant 150 miles southwest of Franke's, customers are feeling a similar vibe.

"We gave the bartender $20 each. And now we're going to push the buttons and hope we win," said Rory Johnson, who sat on a recent night with Tammy Roos and playing Nile Treasure, one of the new games that came online across the state in August.

The pair hit the jackpot, turning their $40 into $400, giving them and the e-pulltab business a little mutual boost.

MPR News reporter Mark Steil contributed to this report.