Hope Revives for Minnesota Sports Betting Legalization

While recent weeks have seen optimism for sports betting legalization in Minnesota wane, a spark of hope remains with roughly ten days left in the state’s legislative session.

On Friday, the Minnesota House Ways and Means Committee advanced sports betting language from HF 2000 into HF 5274, a bill that seeks to ban historical horse racing in the state. The merged bill has now been sent to the House floor.

The language in HF 2000 aims to introduce legal sports betting apps in Minnesota, granting mobile operator licenses to the state’s 11 recognized tribes. Sports wagering revenue would be taxed at a rate of 20%.

Although the bill’s future in the Senate remains uncertain, Minnesota House Speaker Melissa Hortman shared with Axios that she estimates a 60-40 chance of the bill passing. This marks a significant shift from just a few days ago, when many legislators hinted that the effort was nearly doomed.

So far, no states have legalized sports betting in 2024, but Minnesota remains one of the few with a viable opportunity.

House Moves Forward with Sports Betting Legislation

The House Ways and Means Committee committee approved a delete-all amendment by voice vote, incorporating the language of HF 2000 (sports betting) into the base language of HF 5274 (horse track regulations). The combined package was then sent to the House Floor following a split-voice vote.

Rep. Zack Stephenson (DFL-Coon Rapids), who sponsors both bills, believes legalizing sports betting is essential to combating the extensive illicit black market currently operating in the state.

“It is unlawful to engage in sports betting in Minnesota today, and it happens every single day in extreme amounts. We will be transitioning people from the black market into a legitimate marketplace.”

Stephenson argues that legalizing sports betting would allow the state to tax all sports wagers, benefiting the state’s finances and funding programs to address problem gambling.

The bill would issue sports betting licenses to Minnesota’s 11 tribal nations, permitting individuals aged 21 and older to bet on various athletic events, including esports. Bets could be placed at physical locations on tribal lands or via mobile apps licensed to tribal entities.

Betting on horse racing or youth sports would be prohibited, but certain fantasy contests would be allowed.

A 20% tax would be levied on sports betting net revenue from wagers placed online through websites or mobile applications, while bets placed on tribal land would be tax-exempt.

Stephenson highlighted that the bill would prohibit betting on horse races to protect the economic viability of Minnesota’s two horse racing tracks, which are already struggling due to diminishing purses.

A portion of the tax revenue collected would be allocated to supplementing purses at the tracks, with $625,000 annually divided between Canterbury Park (72%) and Running Aces (28%).

Despite these protective measures for horse racing, Rep. Brian Pfarr (R-Le Sueur) expressed concerns that legalizing sports betting in Minnesota might still harm the tracks. “That’s not enough, because if those businesses are gone, it doesn’t matter.”

Funding and Appropriations

The bill proposes an appropriation of $8.32 million in fiscal year 2025 to the Department of Public Safety for the establishment and regulation of mobile sports betting and fantasy contests. Future appropriations include $5.49 million in fiscal year 2026 and $5.47 million annually beginning in fiscal year 2027.

Regulating Gambling at Horse Racing Tracks

The bill also defines “historical horse racing” machines as gambling devices, which would be prohibited at Canterbury Park and Running Aces.

Stephenson compared these machines to slot machines due to their random payout nature. By law, slot machines are only permitted on tribal lands.

Historical horse racing machines allow players to bet on random replays of past races using terminals that resemble slot machines. Key details such as the race location, date, and names of the horses and jockeys are not shown, making the payouts seem random.

Stephenson emphasized that since players cannot handicap the race, the payouts are essentially random, similar to slot machines.

Source:

“Legalized sports betting back on track as session reaches home stretch”, May 10, 2024.