Gaming Studio, Inc.

Thoughts on Minnesota Electronic Pull Tabs

The 2012 Minnesota legislature became interested in using the concept of “electronic pull tabs” as a method of increasing the state revenue from charitable gaming in order to fund part of the state's commitment to a sports stadium.  While the first patent for an electronic pull tab was issued in August 1991 to Gaming Studio's founder and current CEO, we were not consulted with regard for the legislation and, even if we were, it is unlikely that we would have had much influence on the final legislative product.  Tribes were worried that their electronic slots might be compromised if the electronic pull tabs were too attractive.  Similarly, there were paper pull tab manufacturers who certainly were not interested in success of the electronic product.  Finally, there were legislators who oppose gaming and certainly were not going to be saddened if a few poison pills were dropped in the language authorizing electronic pull tabs.  It was not a very appetizing sausage that made it through this design by committee process.  Those who wanted rotted sausage (we're using the metaphor for the process of bills becoming laws) have been greatly relieved.


What makes a pull tab such a popular game?


Transparency.  Pull tabs are the most transparent "ticket style" game.  Transferring those qualities into an electronic game would give you a game that tribes and paper-pull-tab manufacturers should worry about.   Key to that transparency is the display of how many high-tiered winning chances remain among the displayed container of all remaining chances.  That is huge.  And, that was precluded in statute with the following:


                349.12 DEFINITIONS.

                                 Subd. 12b. Electronic pull-tab device. "Electronic pull-tab device" means a handheld

                         and portable electronic device that:


                                  (8) may have auditory or visual enhancements to promote or provide information about the

                         game being played, provided the component does not affect the outcome of a game or display

                         the results of a game;


The red six words above killed the transparency that has made pull tabs the most popular ticket games in Minnesota - 2.9x more sales in FY13 than lottery scratch tickets.  The legislature effectively banned electronic pull tabs from indicating how many high winning chances remain among a displayed quantity of chances.


Value Errors and Omissions


It is not uncommon to hear legislators and even gaming people express confusion over the price of their product.  The difference between a game that pays out 90% in prizes and one that pays out 85% if only a minor 5%, they will say.  No one will notice it, they often report.  Actually, the difference between a game that pays out 90% and a similar game paying out 85% (required of electronic pull tabs) is an increased cost to the player of 50%.  A 50% cost differential is significant.  So, on the tribal lands you have slot machines paying out 90%, meaning that players lose $10 on every hundred bet while charity electronic pull tabs charge players a 50% premium of $15 for a hundred dollars bet.  Electronic pull tabs charities operate have the same payout limit as paper pull tabs - 85%.  The transparency attributes were stripped while maintaining a very uncompetitive pricing.


The total payout for slot machines in Washoe County, Nevada (Reno) of all denominations for the 12 month period ending June 2014, was 94.95% or 95%.  I use Washoe because Clark County (Las Vegas) is not similar to any player base in Minnesota.  Thus, players are being charged $5 per $100 played in Washoe County, NV and $10 per $100 played in tribal casinos in Minnesota and $15 per $100 played for charitable gaming electronic games.  The question is begging:  what value does Minnesota electronic pull tab gaming bring that allows it to charge three times as much as Washoe County, NV or twice as much as tribal casino electronic games?


Players understand intuitively that their money goes a lot faster where they pay a lot more.  I get that the cost of paper tickets that needed to be freighted in from out of state, counted, stored, trucked to sites, counted more and disposed of safely is expensive and may justify a higher price to players.  Also justifying that price is that players are given a great deal of information on the status of the paper games.  With electronic chances, there is a nominal - almost no product cost per chance vended.  The payout can not be justified at 85% and players are rejecting the value offered.


Another Bad Value


Why are electronic pull tab chances required to be 25¢ or more?


                   349.12 DEFINITIONS.


                                     Subd. 12c. Electronic pull-tab game. "Electronic pull-tab game" means a pull-tab game



                                     (4) a price paid by the player of not less than 25 cents per ticket;


The trend on slot machine floors is for 1¢, 5¢ or 10¢ machines that now cover a third of the slot space.  Add multi-denomination machines and you have maybe half the machines with less than 25¢ plays.  Now that supply costs have been divorced from single chances vended, why not go where the public market is going?


Miscellaneous Confusion


                                     Subd. 12c. Electronic pull-tab game. "Electronic pull-tab game" means a pull-tab game



                                    (1) facsimiles of pull-tab tickets that are played on an electronic pull-tab device;


This takes one to the dictionary - but you need a Minnesota dictionary to learn what "facsilimiles" means.


                                       Webster Dictionary:

                                       1. an exact copy

                                       2. a system of transmitting and reproducing graphic matter (as printing or still

                                           pictures) by means of signals sent over telephone lines


                                       Oxford Dictionary:

                                       Definition of facsimile


                                      • an exact copy, especially of written or printed material:a facsimile of the manuscript


Can't have a facsimile of nothing.  In other words, the pull-tab ticket must exist for the electronic pull-tab to have a facsimile.  This facsimile business confuses today and I am sure the paper pull tab printers thought that electronic game manufacturers would need to license the paper game for which electronic chances were facsimiles.  Perhaps we will yet see litigation on this matter.  We would not want to be the manufacturer who is stuck with an injunction to pull games because the chances are not facsimiles.  I wonder how many others are discouraged by this potential problem?


                                      Subd. 12b. Electronic pull-tab device. "Electronic pull-tab device" means a handheld

                           and portable electronic device that:


                                      (9) no spinning reels or other representations that mimic a video slot machine.


There is no doubt what is being attempted here; however, from a design perspective it becomes a tad silly.  If you look at the electronic pull tabs in play today, they appear quite similar to slot machines.  Slot machines deploy every graphic sequencing method one is likely to use in any game that has symbol sequencing of any kind.  This is entirely impractical and it is dangerous to game designers because it exposes companies to terrific costs should someone wish to contest what it means.


                                     Subd. 12b. Electronic pull-tab device. "Electronic pull-tab device" means a handheld

                          and portable electronic device that:


                                     (3) requires that a player must activate or open each electronic pull-tab ticket and each

                          individual line, row, or column of each electronic pull-tab ticket;


We see in (9) above that we can not mimic a slot machine.  Slot machines have symbols in rows and lines.  Here the tickets are required to be in rows and lines -- just like a slot machine.  Gaming Studio has a fishing game here at the bottom of the page that displays chances as you reel a line in.  That game does not use the line, row or column scenario required above and therefore could not be approved.  There are all manner of creative displays of winning and losing chances that do not involve the repetition of symbols organized in lines, rows or columns like that of a slot machine - and, even a pull tab (which is a copy of a slot machine in the first place).  I would ask that this be deleted so that we can provide a greater level entertainment while still keeping within the finite structure required generally.

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