• Print •  • E-mail Alerts • Search Articles

September 2004

State Roundups
Minnesota

Gambling on charity

Minnesotans spend over $1.4 billion on charitable gambling per year, 93 percent of which is accounted for by pull-tabs. But pull-tabs might not be fulfilling their intended purpose as well as they once did.

The peel-off gambling tickets were legalized in 1981 under the condition that a portion of proceeds go to charity. But in recent years the share of revenue that makes it to charitable organizations has dwindled, according to an Associated Press series on the issue.

Sales generated almost $70 million in charitable contributions in 2003, down from a peak of more than $78 million in 1999. That's a decline of 10.5 percent, while total sales for the same period declined only 3.6 percent.

The charity take has decreased due in large part to rising administrative expenses. While customers still pay only $1 per pull-tab, in the last 10 years expenses have gone from 46 percent to 52 percent of revenue.

An additional factor in fewer dollars going to charity may be a lack of oversight. Regulators worry that cheating the system has become more of a problem because the Minnesota Gambling Control Board has only two investigators, or about one per 1,400 locations selling pull-tabs, as a result of staff cuts.

The state Legislature has ordered an audit of the program.

Unallotment allotted

The Minnesota Court of Appeals upheld a decision by Gov. Tim Pawlenty to use funds for Iron Range development to make up for last year's budget shortfall.

The suit, brought by legislators, taxpayers and towns from the Iron Range, argued that the administration's decision to take $49 million from the economic development account violated a 2002 law regarding the redirection of funds, or “unallotment,” when the state faces a deficit. Claimants argued that the governor had no right to dip into it because the fund is separate from the state treasury.

The account, which was intended to promote business and education in the Iron Range, now holds about $10.6 million after the removal of funds.

The court held the governor's action legal; however, it affirmed the right of the Iron Range Association of Municipalities and Schools to sue over the issue. Plaintiffs said they would likely appeal to the Minnesota Supreme Court.