Last night, the Mankato City Council decided it was not ready to implement planned changes in the way local authorities tax pull-tab gambling.
After facing strong opposition from the leaders of the local Veterans of Foreign Wars (VFW), City Council members chose to halt the recommended changes for the time being. They unanimously voted to leave the issue for further discussion later in October. A decision on the matter is expected to be made by the end of November.
Previously, the Mankato City Council has revealed that it is considering some changes the way gambling is taxed so that gambling tax revenue can be redirected to local charities that needed the funding. Since the late 1980s, the city has collected a 3% tax of gross revenue from pull-tab gambling machines which are usually offered at local bars. The revenue has been the main source of funding for eight charity organizations that are working in the area. The proposal for the tax change seeks to see a 10% tax imposed on the net revenue of such operations after the operators’ expenses are deducted.
According to preliminary expectations, approximately the same amount of revenue would be generated, which would be around $100,000 on an annual basis. What city officials expected to significantly change, is the way the city of Mankato spends the money.
Proceeds from the Increased Gambling Tax Would Be Used to Fund Community Projects
Under the provisions of the Minnesota state law, the 3% tax had to be spent on gambling regulation. Mankato city authorities, however, have lately been facing some difficulties to keep track of documentation of regulatory spending as required by the state Gambling Control Board. With $522,000 collected by Mankato city authorities since 2012, local officials managed to adequately document only $269,000 in gambling-regulation spending.
Now, the city officials have been considering to refund $253,000 to the charities which sponsored pull-tab gambling over the last seven years. As mentioned above, the City Council has been considering to switch to a much larger tax of 10% in 2020, with the proceeds aimed at being spent on various charitable initiatives, youth activities, social, art and culture programs, etc.
As mentioned above, preliminary estimates have shown that the overall tax collections would remain pretty much the same even after the implementation of a 10% tax on pull-tab gambling, but not all charities are expected to break even due to the difference in their operations and level of expenses. Three organizations – Mankato Area Hockey Association, the VFW and the Eagles Club – would pay more, while five others would see their payments decline with between 26% and 40% under the new tax.
As one of the city council members, Jessica Hatanpa, revealed, the proceeds generated as a result of the 10% tax that is considered to be imposed on pull-tab gambling operations in Mankato are planned to be used partly to cover the city’s share of All Seasons Arena’s operating expenses, as well as for some significant community projects supporting music, art and community festivals.