Latest Vikings stadium hang-up: gambling operatorsPublished 8:35am Friday, March 30, 2012
ST. PAUL — Supporters of a new Vikings stadium have run into a new obstacle: Backlash from charitable gambling operators whose taxes are the hoped-for source to cover about one-third of the nearly $1 billion project.
Those charities are skeptical of promises of new profits from proposed electronic versions of a couple games, and angry at a tax bite many believe takes far too much of their profit. Resistance from the charities has so far kept the bill from a hearing in the House.
The state wants to raise its $398 million contribution to the stadium by authorizing electronic versions of the pull-tab and bingo games that charities operate at bars and fraternal clubs around Minnesota. The Gambling Control Board forecasts a spike in sales and tax receipts that would bring in about $124 million, with about half going to the state to cover stadium bonds and the charities keeping the rest.
Gov. Mark Dayton’s proposal to direct about $10 million toward tax relief isn’t enough to change the minds of many charity operators. Dayton acknowledged the hang-up Thursday, saying the charities and their legislative allies “need to work out their own conclusion to this first, and hopefully we’ll get an agreement.”
For charities, the proposal’s problem is that it rests on a widely despised system of taxing their gambling operations.
“The state of Minnesota is our biggest charity,” said Mark Wills, gambling manager for the Maple Grove Lions Club. “It’s incredible how much we pay in taxes. It really is.”
Last year, the Maple Grove Lions paid $255,018 in taxes while netting $85,888 from gambling operations at two bars. That money went to scholarships, a Christmas food drive, youth sports programs and a juvenile diabetes fund.
“It’s absolutely abusive,” said Brian Fitzpatrick, who manages gambling operations for Confidence Learning Center in the Brainerd area. The outdoor education program for people with developmental disabilities raises much of its yearly budget with profits from games of chance in 29 bars and clubs in northern Minnesota.
Charities typically return about three-fourths of their gross game receipts in prizes. But they’re still taxed on those gross receipts rather than their profit, meaning many charities end up paying a lot more in taxes than they get in profits. For instance, Confidence Learning Center had $8 million in gross receipts in 2011; they paid $486,372 in taxes and netted $255,078.
About 1,200 Minnesota charities raise money from gambling. They groups range from youth sports leagues to service organizations like the Lions and the Elks, to VFWs and American Legions. There’s even a boys choir in Elk River with a charitable gambling operation. There are five different games charities are authorized to offer: pull-tabs, bingo, raffles, paddle wheels and tip boards.
Before 1989, charitable gambling operators paid a flat 10 percent tax on their profit. Today, operators pay up to three separate taxes depending on which games they offer, and at different rates depending on the size of their operations.