It has come to our attention that Pilot Games is starting an organization to compete with ACM that will be more “electronics friendly”.
ACM is a primary reason that electronics are available for play in Minnesota today. ACM has supported electronics as a tool. What we do not support is making less revenue on electronic pull tabs than we make on paper pull tabs. We also do not support not having choices when it comes to payout, which Pilot does not offer as all of their games are at 85% payout.
Currently the average net for paper pull tabs is right at 4 cents per dollar sold. That number has declined over the past several years as our payout average, cost of doing business and overall tax rate have all increased. The average net for electronic pull tabs is currently less than 3 cents per dollar sold. That is if your payout is at exactly 85%, which over time will not happen with an 85% game, whether paper or electronic they will pay out more than 85%.
Mr. Weaver has told me personally that if we could play 90% games that we would have more money than we know what to do with. He cites Las Vegas as the example of how to run a gambling organization. While I admit to not fully understanding how Las Vegas gambling works, I do know how charitable gaming in Minnesota works and I disagree with that statement. With our cost and tax structure playing all 85% games is a prescription for going out of business, playing 90% games would only accelerate that.
ACM asked Pilot Games to offer less than 85% games and to lower their 31% revenue share. They have declined to do either of those. We are now faced with going to the legislature to affect those changes.
One has to wonder about the motives of for profit companies starting and funding an organization that is purported to represent charities. I would tell them that two immediate changes that they can make are to lower their fees and make less than 85% games. Those two changes alone would be of huge benefit to charities, their communities and missions.
I am told that Pilot Games tells prospective customers that they will make 17% on their electronic tabs. The question that needs to be asked is 17% of what? 15 cents on a dollar wagered (85% payout) equates to a net 2.5 cents, 10 cents (90 percent payout) equates to a net 1.7 cents.
Here is a perfect example of what I am talking about and what is so wrong with our current situation. In FY2017 our sales increased by $194 million. Out of that $194 million we increased our bottom line funds for our communities and missions by $1 million. Our return was one half of one percent. The state on the other hand increased their bottom line by close to $11 million. Their return was five percent. Their return was ten times greater than ours. Why? Because of our payout percentage, cost structure and tax structure.
Our payout percentage, cost structure and tax structure are providing too little reward on our work and risk. We did all of the work and took all of the risk, but received only a pittance of the reward. Electronic pull tabs played a part in this. One is left to wonder what Pilot Games return on investment was and how that compared to ours.
I have been told that charities should be accepting of making less on electronic pull tabs as there is less work to do. We do not agree with that. There is less work to do than paper pull tabs, but there is still work to do and we are supposed to be about making money for our communities and missions, not about making manufacturers or the state rich.
ACM believes that every charity has the right to decide what tools they choose to use. We will never accept a mandate to use any tool and we encourage every charity to fully understand what they are netting on every tool that they choose to use. We will never support bars having electronics without a charity. We have lost sight of what charitable gaming is supposed to be about and that is becoming more evident every day. Use Pilot Games, don’t use Pilot Games, but do it with your eyes wide open.