The trajectory towards legalized sports betting in Minnesota took a turbulent turn with two recent legislative and legal challenges that have stirred the pot in an already complex debate.
On Thursday, 18 April, the Minnesota House Commerce Finance and Policy Committee voted in favor of an amended bill poised to prohibit historical horse racing (HHR) machines at racetracks, a move that unsettled the gambling landscape. While not directly tied to Minnesota’s sports betting legalization efforts, the move marks the second instance this week of complexities hindering progress.
Earlier on Tuesday, 16 April, Running Aces, a harness racing track positioned to the north of the Twin Cities, initiated a legal confrontation by filing a lawsuit against three tribal casinos. This move can be viewed as a strategic counter in the ongoing struggle to establish legal online sports betting in a state where federally recognized tribes hold exclusive gambling rights. Despite ongoing attempts by state lawmakers to negotiate a compromise, recent weeks have been characterized by a shift from legislative tactics to outright confrontation.
Running Aces, which is under the ownership of Black Diamond Commercial Financial, has accused the tribes of unlawfully providing banked card games, thus gaining an “unfair competitive advantage” and allegedly siphoning off a significant portion of the racetrack’s revenue and potential profits.
Taro Ito, Running Aces CEO, in a statement documented by the Minneapolis Star-Tribune, asserted, “All that we have ever sought was to be treated fairly, compete on a level playing field, take advantage of improvements within the pari-mutuel environment, and operate without fear of being eliminated.”
The integration of horse racing, or parimutuel wagering, with legal sports betting has become a trend across the United States, with states such as Illinois, Louisiana, Massachusetts, and New Jersey paving the way by incorporating “racinos” at horse racing venues, thereby injecting a fresh source of income for a sector that’s felt the economic pinch.
However, Minnesota is among the dozen states nationwide where gambling exclusivity is held by federally recognized tribes. Tribal sovereignty is held in high regard, with tribes prepared to defend it vigorously, often opposing any legislative changes that could impinge upon their gambling monopoly. The introduction of HHR machines is viewed by the tribes as a direct challenge to their exclusivity, and by extension, their sovereign rights.
Legislative balance between commercial and tribal gambling interests necessitates both skill and subtlety. In an earlier legislative maneuver, Representative Zack Stephenson, who has championed sports betting legalization in recent sessions, mediated a deal between the state’s tribes and the charitable gaming sector, resulting in a $40 million redirection of gambling revenue to charitable gaming, thus maintaining the status quo relating to pull-tab machines.
While tribes and charities seem to be warming up to sports betting legislation in Minnesota, so does the Star Tribune, and perhaps the racetracks as well. The question looming over the sector is whether the state can finally align its interests adequately.
In 2023, the legislature passed a statute that authorized an “open all” feature on pull-tab machines, a move that, according to tribal arguments, would render them nearly identical to slot machines. When Stephenson forged that deal, he concurrently had to revise his betting bill significantly, with the tax rate proposal doubling from 10% to 20% and resources previously marked for horse racing purses being trimmed down to $625,000. The tracks have vehemently argued that such reductions are inadequate and would decimate the racing industry. Stephenson’s draft excluded any form of casino-style gambling at the tracks.
The Minnesota Racing Commission (MRC) retorted to Stephenson’s amendments by green-lighting HHR machines at the state’s two main tracks — Running Aces and Canterbury Park. Tribes argue that these machines bear too close a resemblance to slot machines and thus encroach on their gambling rights. Stephenson branded the MRC’s action as unlawful and promptly presented a bill to ban such machines. This bill, HF 5274, has since advanced through the legislative process with tribal support.
In a recent legislative meeting, Representative Jon Koznick, who advocated for slowing down the bill’s progress, saw his motion defeated. As HF 5274 advances rapidly towards a House vote, the legal calendar ticks onward, with the legislature due to adjourn on 20 May.
The lawsuit filed by Running Aces claims that two tribes — the operators of Grand Casino Hinkley, Grand Casino Mille Lacs, and Treasure Island — have been offering unauthorized Class III card games.
Amid allegations of illegal gambling, games like Mississippi Stud and Texas Hold ‘Em have become points of contention in the lawsuit. While similar games have since been legitimized through compact amendments, the legal dispute reinforces the convoluted web surrounding Minnesota gambling laws.
The stakes are high as this complexity not only embroils lawmakers and tribal entities in lawsuits but also muddies the waters for potential legal sports betting in Minnesota, leaving the possibility of resolution deeply uncertain as the legislative deadline rapidly approaches.
