The Revolutionary Electronic Pull-Tab: Part 1

From the first beano game developed by Edwin Lowe in 1929, charitable gaming in North America has had one consistent element: change. The old adage that “the surest predictor of future behavior is past behavior” is certainly true for charitable gaming. Technological advancements have been the driving force in maintaining charitable gaming’s ability to remain relevant in an ever-changing entertainment-based culture. This is especially true in today’s computerized and gadget-rich environment.

If we think about the environment into which beano was introduced, it is one where electricity was in its infancy—most people literally got around by horse power. Newspapers were printed using type set by hand, and most people didn’t travel more than 100 miles from where they were born their entire lives. The game of beano, however, still managed to spread across the country and was adopted by many charitable organizations as a fundraising mechanism. The popularity of beano, or bingo, as it was to become known, has not waned in the ensuing century and is still providing hundreds of millions of dollars to charitable organizations for their good works.

The evolution from a paper medium to a digital medium is well underway in virtually every aspect of our society, and charitable gaming has not been spared. Bingo has undergone technological changes throughout its existence, including advancements such as shutter cards in the 1960s and disposable paper and ink daubers in the 1970s. The introduction of computers in the late 1980s had the greatest impact to the play of the game and the economics of the modern bingo hall. A detailed evolution of electronic bingo devices can be found in the January 2012 issue of Casino Enterprise Management. Electronic bingo devices provided to individual bingo players greatly increased the number of bingo cards a bingo player could play. No longer did you need to be a bingo savant to play many cards—you could now rent a device that would “mind” your cards for you. This allowed players to participate in the game at a level predicated by how much they wished to wager on the game rather than at a level predicated by the number of cards they could physically play. This was revolutionary.

Bingo’s Challenges
Bingo managers were quick to realize that the increased player spend would be beneficial to their games and allow for increased profits, and soon electronic bingo card minders became the norm, not the exception. But this did not happen overnight. The process took many years and had a number of obstacles in its path, including player acceptance and the regulatory environment.

Aside from player acceptance, the challenge was incorporating electronic card minders into the regulations that arose around the game. Regulations were primarily enacted to protect charities from unscrupulous operators and protect the players from any kind of fraud within the game itself. Given that the regulations were developed around the technology of the day, imagine the challenges with getting approval for an electronic device when regulations defined the game of bingo as being played on a paper card. I must tip my hat to the pioneers whose creative and persuasive arguments opened the door to allow the first electronic devices to enter the marketplace.

Then, too, credit also must be given to the product development teams who twisted and morphed their “square peg” product to meet an ever-changing “round hole.” Some of the more creative interim solutions, which were prevalent for many years, included the bingo systems printing a tangible bingo card for each card face playable in an electronic device (hence the name card minder). In some jurisdictions the player was required to purchase traditional bingo paper and the device was programmed to play the exact same cards as those purchased. The challenges presented by both these methods were endured by the industry simply because of the regulatory framework in place. This is not to say that state regulators weren’t aware of the burdens placed on charities, but in the vast majority of cases, their hands were tied because of the legislation of the day.

With player acceptance of the devices and a growing regulatory trust in the manufactures of card minders and the systems they required, regulators teamed up with manufacturers, distributors and charities in numerous jurisdictions to craft meaningful regulations to control and safeguard the game while allowing for ever-changing technological advancements. The collaborative environment regulators had with each other through their membership in the North American Gaming Regulators Association was of great assistance to this effort. Regulations that were effective in one jurisdiction proved to be effective in other jurisdictions, even with their varying legislative environments and agency mandates.

Bingo’s Technical Evolution Replicated
The technological evolution that changed the play of bingo is currently being replicated in the charitable game of pull-tabs—also known as break-open tickets, charity game cards, jar tickets, pickle cards, instant bingo cards, punch boards, bell jars or lucky sevens in various regions of the United States and Canada. For those not familiar with the game by any of its names, a pull-tab is a folded ticket or card with perforated tabs on one side, the face of which is covered or hidden to conceal numbers, symbols or letters. As only some of the concealed faces have been designated as prize winners, players are attempting to obtain winning pull-tabs. Generally there are a couple of thousand preprinted pull-tabs boxed together in a “deal.” When the entire deal has been sold, it will generate a predetermined dollar value to the charitable organization selling the pull-tabs. The play of the game requires the players to open the pull-tabs and compare the configurations with game information sheets (or “flares”) to determine whether a particular pull-tab is a winner.

The history of pull-tabs is not nearly as extensive as that of bingo. Pull-tabs emerged in the 1970s as a popular fundraising game for charities and found easy acceptance in bingo halls. They spread to other locations, such as fraternal clubs, service clubs and veterans’ organizations, and, in several states, taverns. By any of its names, pull-tabs are fun to play and have proven to be profitable for charities.

Over its history, pull-tabs have followed an evolutionary path parallel to that of bingo, with technological and game advancements being driven by player enjoyment and game integrity. Likewise, the same regulatory framework requiring the licensing of manufacturers and distributors that is prevalent for the play of bingo is also prevalent in the world of pull-tabs.

The technological and regulatory advancements that were adopted over the years include: serializing of deals, bar coding of individual tickets, secure delivery channels and tamper-evident packaging. These advances came about primarily to address game integrity issues of deal manipulation and ticket counterfeiting. The primary defense against outside influence on the game was the manufacturer’s processes of creating and randomizing the deals and incorporating electronic ticket verification, while the greatest threat to the game’s integrity came from the manipulation of the deal by unscrupulous individuals who would try to control the delivery of the winning tickets. Great emphasis was placed on the delivery mechanism of the actual deals to detect any tampering with the manufacturers’ products. Methodologies such as packaging standards and tamper-evident seals went a long way to reduce these concerns but did not eliminate them.

Pull-tabs’ Game Integrity
Advancements in the play of the game—including seal cards, coin boards, event games and, more recently, progressive prizing—expanded the reach of pull-tabs and allowed for a more entertaining and competitive product, but these did little to address the challenges faced by pull-tabs. Aside from challenges, such as incorrectly validated tickets or incorrectly awarded prizes, the sales errors inherent in so many cash transactions and the non-trivial challenges posed by regulations controlling the sale, distribution and accounting of pull-tabs, the primary challenge that traditional pull-tabs face is the manipulation of the deal through insider information.

Pull-tabs require deal randomization in order to present a fair game to the players. Many years ago, manufacturers eliminated any randomization issues, but, as the number of pull-tabs in a deal is finite and given there are relatively few big prize-winning pull-tabs within each deal, the seller of the pull-tabs can evaluate the payout percentage of a deal while it is “in play.” Take for instance a deal of pull-tabs that has 50 pull-tabs at a face value of $1, among which there is one winning tab valued at $25 and three winning tabs valued at $5 each. If the seller sells 10 tabs and the $25 tab is sold among them, the seller could advise friends against purchasing tabs from the remainder of the deal, as the big winner is gone. Conversely, if the seller sells 30 tabs without the $25 winning tab being sold, he could encourage friends to purchase the remainder of the deal, as it is a no-lose proposition.

While this example does not reflect real-world deal statistics, it does highlight the fact that the sellers have insider information that can be used to manipulate the sale of tickets. This has long been recognized by manufacturers, regulators, sellers and players. To combat this, many strategies have been employed. For example, in North Dakota, whenever a deal is half sold, a second deal is mixed into the original deal, and the two deals are co-mingled. As this is done on a perpetual basis, it is much harder to track the winners, though it also makes it difficult to determine what the actual results of a single deal of pull-tabs are.

In Minnesota, pull-tab sellers routinely mark off the prizes listed on the flare to provide all the players with the same information about the odds of a deal at any point in time. However, this practice results in “dead deals” when players see that the winning pull-tabs have already been sold earlier on in the sales period—and the sellers therefore cannot sell the remaining tickets. To combat these losses, the sellers routinely “pull” deals from which they have sold a larger proportion of losing tickets. In either circumstance, the deal must be taken out of play and accounted for.
While other methods are employed to combat deal manipulation, the fact remains that, given the nature of the paper pull-tab, there will always be concern about game integrity.
Digitalization is a complete game changer.

Note: Check the CEM September 2013 issue for Part 2 of this article.

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