Leech Lake Band changes gambling rules, pushing charities out of the equation

WALKER, MINN. – Recent changes to charitable gambling on the Leech Lake Band of Ojibwe reservation have upset the pulltab basket.

Nine nonprofits relying on pulltab revenue to fund everything from youth hockey to volunteer fire departments stand to lose tens of thousands of dollars because they may no longer be allowed to operate in bars on the reservation. The band controls all charitable gambling in a new system that allows bars to offer gambling, pushing charities out of the equation.

Under the state’s system, nonprofits must conduct all charitable gambling, paying the bar 20% and a sliding scale to the state up to 35%. Under the band’s ordinance, bars keep up to 35% and the band gets no less than 60%. The state gets nothing — neither do charities.

Minnesotans play more pulltabs than any other state, with $4 billion spent on paper and electronic pulltabs last year raising money for charitable causes. More than 200 youth sports organizations in the state depend on pulltabs.

Rollout of Leech Lake’s new system, which it says will promote tribal economic development and self-sufficiency, has been causing angst and confusion. Notification letters sent to bars said existing pulltab sales violate the band’s gaming ordinance and bars must obtain a license through the band, which can take four months. In order to get one, bars must operate electronic bingo slot machines or regularly offer electronic bingo games. Subsequent letters with a Nov. 1 deadline said to end sales immediately. Now the band wants voluntary compliance. It’s also voluntary for bars to support a charity, but not a requirement.

“That doesn’t mean we’re excluding the charities or banning the charities,” said Leonard Fineday, the band’s secretary and treasurer.

But that’s not how Allied Charities of Minnesota, a St. Paul nonprofit that serves charitable gambling organizations, sees it. Rachel Jenner, the executive director, has called the change “catastrophic.”

“You’ve now cut the charity out,” Jenner said.

The tribal system incentivizes bars to go without charities. A letter sent to bars in May said that “we can negotiate a better price purchasing the pulltabs and you have the opportunity to make more money from the sales.”

Of the five bars operating under the band, none are supporting a charity, Fineday said. It’s unclear how a dozen other bars and resorts on the reservation will proceed. But some are carrying on with their state charitable gambling license while some bars say they may opt out of pulltabs completely.

Mike Bennett, co-owner of the Big Tap in Cass Lake, offers pulltabs in his small bar through Leech Lake Area Amateur Hockey. He’s considering the bingo games, but he doesn’t have room for slot machines and said, “I don’t want to be a casino.”

“There’s money to be made, I just don’t want to be that guy. I don’t want to be where the machines are going ding, ding, ding, ding, ding,” he said. “Right now I would think that we would just eliminate the pulltabs and not have any gambling at all.”

The hockey association said 42% of all its pulltab revenue, about $27,000, comes from four bars on the reservation. Losing those sites will cause major budgeting challenges, said Nate Gustafson, president of the organization.

“The hockey season won’t be any different. You get on the ice, the game is the same. For the leadership, it will be different,” he said.

Proceeds from pulltabs help provide high-end equipment to players for minimal rental fees and help pay for the $50,000 ice rental at the Walker Community Center rather than offloading that cost on families.

This week parents volunteered to paint lines on the ice ahead of practices starting up Monday. Five-year-old Alter Sanders of Laporte stopped by to pick up a duffel bag full of hockey gear. He doesn’t know how to skate, he said. “Not yet. Not without an adult.”

His dad, Kyle Sanders, said that he’s not sure if his son will like hockey, so it’s nice to test it out by paying a $25 rental fee through the association rather than dropping hundreds of dollars.

Gustafson said when he became association president eight years ago, they had 11 players Alter’s age in the mini mite league. Last year they tripled that. He said any loss in revenue will ultimately hurt the kids and potentially come down to fee increases for families.

Dan Mull, president of the Ridge Runners Snowmobile Club in Northome, said his group has sold pulltabs at two bars on the reservation — Fish Tales and Gosh Dam Place — for at least a decade. The two sites bring in 25% of its charitable gambling revenue. It sells pulltabs at six other off-reservation bars. Last year, the club donated $46,000 of gambling proceeds to 25 different organizations, including three area fire departments and scholarships for graduating seniors.

The club was created to maintain 146 miles of snowmobile trails and just under 50 miles of ATV trails, but it donates to sports teams, community events and helps with medical benefits for residents who fall on hard times.

If it loses those two sites, as Mull suspects will happen, pivoting elsewhere may prove difficult as nearby off-reservation bars likely already support other charities.

“There’s a lot of loyalty to the clubs that are providing the charitable gambling for these bars. And there’s just not a lot of turnover,” Mull said.

Jenner, with Allied Charities, said she’s trying to find a way for charities to still operate on the reservation and apply for licensing, if possible, but there’s a lot of uncertainty.

“I’ve been talking to people and trying to find a way to salvage it,” she said.

Fineday said there is not currently a process for charities to apply for licensing through the band. It’s being considered, but it’s not the priority.

“We’re not trying to keep the off-reservation charities happy and content,” he said. “Our priority is our tribal government, our priority is our community, our priority is the people that we serve.”

The band changed gaming ordinances last year to regulate all gambling and collect that charitable tax revenue rather than it going to the state. White Earth Nation took over pulltabs years ago, too.

Minnesota’s Gambling Control Board, through an open records request, confirmed that it issued premise permits for seven nonprofits to operate at 15 bars on Mille Lacs reservation and two nonprofits at four bars on the Fond du Lac reservation. It began issuing licenses for charities to operate on reservations in the mid- to late 1980s.

Control board spokesman Chris Mau declined to comment on the status of charitable gambling on the Leech Lake reservation because “it’s outside of our regulatory authority.” Mau confirmed that it has not revoked or suspended any permits issued to nine charities at 15 bars there within the past year.

Mull said the state is not going to allow his organization to apply through the tribe because it’s already licensed through the state.

“If we do any sort of gambling that we don’t involve the state of Minnesota and the Gambling Control Board, even a raffle, we can lose our license,” he said. “I think it’s far from over.”