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North Dakota tribes fret about rise of electronic pull tabs

February 26, 2020 GMT

BISMARCK, N.D. (AP) — American Indian tribes in North Dakota have formed a coalition aimed at addressing the meteoric rise of electronic pull tabs in the state that are competing for wagers at their casinos.

The proliferation of the Las Vegas-style games across the state is threatening hundreds of casino-related jobs and much-needed revenue in North Dakota’s long-impoverished Indian country, said Cynthia Monteau, executive director of the newly formed United Tribes Gaming Association, which consists of leaders from each of the state’s five tribes.

“We are concerned about the impact to our tribal gaming operations, definitely,” said Monteau, a lawyer and member of the Standing Rock Sioux Tribe. “The association hasn’t taken a formal position, but we’re looking at our options.”

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Lawmakers approved the games in 2017 but they were not launched until August 2018. There are now more than 2,300 machines at 570 sites in about 80 percent of cities and towns, according to data obtained by The Associated Press.

Tribal casinos have about 3,600 similar slot machines, data show.

An analysis done by the charitable gaming division of the attorney general’s office and obtained by the AP shows net proceeds for the state’s five tribes decreased by more than 17% from 2017 to 2018, while charitable gambling organizations reported a near-identical rise.

Gamblers wagered $161.7 million for the quarter that ended in September, which was a 657% increase from the same quarter in the previous year, data show.

North Dakota collects up to 2.25% in taxes on electronic pull tabs. The popularity of electronic pull tabs corresponded with a 36% jump in state gambling tax revenue, to $9.1 million, in the last two-year budget cycle. Lawmakers had forecast only $7.5 million in revenue from gambling tax collection for the current budget period that began in June, but that mark was nearly met by January, with about a 1 1/2 years remaining.

Deb McDaniel, North Dakota’s top gambling regulator, made an appeal to lawmakers last year to double the size of her agency to keep pace with the “explosive” wagering brought on by electronic pull tabs.

McDaniel said the amount wagered on charitable games in the current two-year budget cycle will top $1 billion, and mostly from electronic pull tabs. That’s about 75% more than the previous budget cycle.

Charitable Gaming Association head Janelle Mitzel estimated that the e-pull tabs will increase money going to charities by 50 percent, to $69 million, in the state’s current two-year budget cycle.

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Mitzel “absolutely” makes no apologies for the increased revenue from the machines that help fund everything from youth sports and volunteer fire departments to programs for the needy.

“There are just a modernized version of (paper) pull tabs,” Mitzel said. “Our industry was becoming stagnant. All neighboring states and Canada have some type of electronic games.”

The group is planning a study to find the economic impact of the pull tabs and the number of jobs that have been created, she said.

“I’m sure these (pull tabs) also have created jobs, but we don’t know how many yet,” she said.

Mitzel said North Dakota’s gambling taxes need to be reworked and that her group supports increased funding for regulators and gambling treatment.

Gov. Doug Burgum, who signed legislation allowing the machines, said they are “functionally slot machines.”

The first-term Republican governor said he did not “want to speculate on potential solutions or compromise” yet.

“We’re going to want to take a look at it,” he said of the concerns by tribes. “The Legislature is going to have to take this up ... do we want a proliferation of slot machines or not?”

Standing Rock Chairman Mike Faith said he and other tribal leaders would at least like to see the total number of machines capped statewide.

Faith said casinos fund numerous social programs and are typically the top employers on North Dakota’s five reservations.

“I think the state needs to take a serious look at this,” Faith said.

Casinos “are supposed to help the economy of socially disabled areas and these (electronic pull tabs) are taking away the intent of that,” he said. “We can’t compete with them. They’re everywhere.”