Minnesota is making significant strides towards the legalization of statewide digital sports betting, under the persistent advocacy of proponents who have been championing the cause for several years. The latest development in this ongoing effort is the passage of the A-21 amendment by an 8-4 vote, subsequently leading to the approval of the bill itself with an 8-5 vote. With its sights now set on the tax committee, the bill continues to navigate the legislative process without the pressure of a crossover deadline, as the state legislature is due to adjourn on May 20. Failure to legalize sports betting this session means the issue would have to be revisited with fresh bills in 2025, as current bills would not carry over.
The journey towards legal sports betting in Minnesota commenced in 2018, but it wasn’t until 2022 that notable progress was made, with the bill passing through the House but faltering in the Senate. One of the primary sticking points in the debate has been the inclusion of the state’s horse tracks in the sports wagering framework. A rival Senate bill that incorporates the horse tracks and designates a 20% tax rate has been making its own progress through six committees and is now headed to the finance committee.
A significant aspect of the recent amendments is the introduction of regulations around fantasy sports, which have been operating without a formal regulatory structure. Although amendment details were not fully disclosed by Representative Zack Stephenson upon its introduction, and the text is not publicly available yet, its impacts can be far-reaching.
The spotlight of the amendment, however, shines on pulltabs and charitable gaming, areas where the state is seeking to optimize revenue distribution. As it stands, the most revenue from charitable gaming goes to the state, followed by game developers, and finally, the charitable organizations. Stephenson stated that the amendment aims to redesign this hierarchy, increasing the potential financial benefits to the Allied Charities of Minnesota (ACM) by $40 million over several years, although he did not specify the exact duration.
This polarizing subject emerged due to concerns from the state’s tribes, who exclusively operate casino games, that pulltab machines are evolving to closely resemble slot machines with technological advancements. Early in 2023, state Democrats passed legislation that mandated pulltabs to be opened individually rather than through an “open-all” feature, an action justified by the need to distinguish them clearly from slot machines. However, this change has been met with criticism from ACM on the basis that it could slow down the games and negatively impact revenues.
Representative Stephenson aims to address these contentious issues associated with charitable gaming by increasing the tax on sports betting profits from 10% to potentially 20%. However, not all stakeholders are in agreement. During a committee meeting, Tracie Wilson, CFO of Running Aces—one of the state’s two racetracks—expressed that the amendment would severely harm the horse racing industry, which feels targeted by the legislation.
Despite some policy changes raising concerns among tribal leaders, the Minnesota Indian Gaming Association (MIGA), which represents the state’s 11 tribes, has provided nuanced support for the legislative push towards legal sports betting. MIGA has historically been opposed to any bills that include the racetracks in the equation.
Yet, for all the controversy, there appears to be a shared goal of finding a mutually acceptable solution. Stephenson has acknowledged his work with both the ACM and the tribes over several years, and it seems an agreeable compromise may be on the horizon.
The Senate bill, contrastingly, has undergone amendments to not only raise the tax rate to 20% but also to eliminate in-game betting. Unlike proposals from Stephenson, this bill does not encompass horse tracks and excludes the latest pulltab agreement.
As the narrative of legal sports betting in Minnesota unfolds, there are many layers to consider—from the protection of existing gaming industries to the ethical ramifications of increased gambling. Yet, with lawmakers keen on reaching a viable agreement before the current session’s deadline, Minnesota is closer than ever to joining the growing number of states that have embraced the legalization of sports betting.
