The Minnesota Court of Appeals has ruled that the state’s Gambling Control Board (MGCB) erred in allowing the addition of a quick play feature for electronic pull tab (EPT) machines. The Shakopee Mdewakanton Sioux Community (SMSC) challenged the legality of the feature. The Appeals Court reversed an administrative judge’s decision in the regulator’s favor.
SMSC argued that adding an “Open All” button makes EPTs too similar to slot machines, for which they and other tribes have exclusive rights. SMSC welcomed the ruling and called on the legislature to pass a ban on such features to resolve the issue once and for all.
The court based its decision on 2019 MGCB emails. The regulator initially decided not to approve the Open All feature. Just nine days later, however, it reversed its decision and said it would allow it on a case-by-case basis. The court ruled that the MGCB emails had amounted to creating policy, not merely communicating it.
Executive Director Tim Mahoney said the MGCB would wait to see if the legislature changes the law. If not, it intends to appeal the decision to the state’s Supreme Court.
Casino operators, whether commercial or tribal, frequently challenge electronic games that come too close to competing with their slots. Court rulings in such cases don’t always go the casinos’ way. In 2021, for instance, a Pennsylvania court ruled in favor of the lottery regarding online instant games with slots-like visuals.
Tribal Gaming and Electronic Pull-Tabs in Minnesota
Minnesota’s native tribes have the exclusive rights to operate Class III gaming activities on their reservations. Class III is the catch-all category for casino gaming activities, including slot machines, blackjack, and other table games.
These gaming activities are authorized under the Indian Gaming Regulatory Act. This federal law allows tribes to operate casinos on their lands, provided they enter into a compact with the state government. The compact sets out the terms and conditions under which the tribe can operate the casino and share revenue with the state.
EPTs are a digital adaptation of pull tab lottery tickets, which are like instant scratch-offs, except that they use cardboard flaps instead of a scratchable play surface. The state legalized EPTs in 2012 to help fund the construction of a new stadium for the Minnesota Vikings. Players can play EPTs in bars and restaurants. Non-profit charitable organizations can also use them to raise funds for various causes.
Players can access EPTs on the same devices used for linked bingo, as both fall under Class II gaming. Like paper pull tabs, EPT machines pick prizes and losing plays from a limited pool of “tickets.” Players must then reveal rows of symbols one at a time to find out if they won.
The “Open All” feature allows players to reveal all symbols simultaneously. However, the SMSC argued that this feature does not comply with the Minnesota statute that legalized the devices.
According to Statute 349.12, EPTs “must activate or open each electronic pull-tab ticket and each individual line, row, or column of each electronic pull-tab ticket.”
SMSC argues that the Open All feature makes EPT gameplay resemble that of slot machines and that operating such machines is therefore a Class III gaming activity.
Electronic Pull Tabs Are Highly Successful In Minnesota
According to Minnesota law, the return to player (RTP) for EPTs is 85%. Most of the net win from the machines goes to the state or charitable organizations, though the manufacturer and the venue hosting the machine each get a small share.
The Gaming Control Board’s Annual Report indicates that EPTs generated $1.94 billion in wagers for 2022, representing a 51% year-over-year increase. Players won $1.67 billion, leaving $270 million in gross revenue. Paper pull tabs produced $306 million, so the electronic games are nearly as popular as their traditional counterparts.
In 2013, the first year EPTs were available, total wagers and purchases for all lottery-operated gambling amounted to around $1 billion. That has more than quadrupled since their introduction to $4.25 billion in gross receipts for 2022. That figure includes electronic and paper pull tabs, bingo, raffles, and other gaming activities. However, it does not include retail sales of traditional draw or instant lottery tickets.
Similar Case, Opposite Ruling in Pennsylvania
Electronic instant games have been a controversial subject for casino operators. While the Minnesota courts have sided with them, that was not the case in Pennsylvania.
In 2021, a judge dismissed a lawsuit by the owners of seven Pennsylvania casinos seeking to shut down the state’s online lottery games. The casinos argued that the online instant lottery violated state law by using casino-style themes and a digital random number generator.
However, the judge rejected their argument, stating that the systems used by the iLottery are not unique to casino products and have a long history of use for lottery games.
Many lottery officials point out that iLottery and iGaming can coexist and be mutually beneficial. EPTs manufacturers make similar arguments in Minnesota. Both iLottery and EPT proponents say they are not the casinos’ enemies. Instead, the real enemy is illegal gambling, which occurs in every state, with a recent TikTok proxy gambling scheme being a memorable recent example locally in Minnesota.