Minnesota Sports Betting Legislation Hangs in Balance

Minnesota's sports betting legislative journey is approaching a decisive juncture, with potential passage looming in the final week. However, the outcome remains uncertain, with political, economic, and legal factors creating a turbulent environment.

After two years of anticlimactic endings, this year's legislative efforts promise a more dramatic conclusion, driven by a confluence of factors including the pressures of an election year, the needs of charitable gaming organizations, and ongoing legal disputes within the gaming industry.

 

Key Developments

• Legislative Maneuvering: Minnesota's sports betting legislation faces a critical juncture in the final week of the legislative session. The House is poised to pass the bill, strategically incorporating sports betting language into a bill addressing historic horse racing prohibition to bypass potential Senate roadblocks.
• Political Pressure and Election Year Dynamics: With control of the Minnesota House at stake in an election year, Democrats are pushing hard for the sports betting legislation, primarily due to tax cuts for charities included in the bill. Failure to deliver on these cuts alongside sports betting revenue could have significant electoral consequences, creating urgency among legislators.
• Negotiations between Tribes and Tracks: The key obstacle to passage lies in reaching a compromise between tribal interests and racetracks regarding revenue sharing and exclusivity over online sports betting. Despite pressure from legislators and pending legal challenges, negotiations have hit roadblocks, underscoring the complexity of the issue and the need for bipartisan cooperation.

 

Sources close to the matter have revealed that the Minnesota House intends to pass sports betting legislation on Wednesday, with hopes of including a deal between Indian tribes and horse racing interests. This agreement, if secured, could garner support from Republicans and pave the way for Senate approval. However, as of now, no such deal has been finalized, and time is running short as the legislative session concludes on May 20.

To navigate potential roadblocks, the House Ways and Means Committee has strategically incorporated sports betting language into HF5274, a bill addressing historic horse racing (HHR) prohibition. By making this legislative maneuver, sponsors Rep. Zack Stephenson and Sen. Matt Klein aim to bypass potential Senate hurdles, particularly from Chair John Marty, who has expressed reservations about sports betting.

A critical change in the House bill is the adjustment of licensing fees, now made annual instead of every three years, which could incentivize sportsbook operators. Additionally, the bill offers tax cuts for charities, a move driven by political pressure, especially in an election year where control of the Minnesota House hangs in the balance.

Taro Ito, CEO of Running Aces, emphasized the urgency behind passing sports betting legislation, attributing it to the need to compensate charities for losses incurred from electronic pull tab restrictions imposed last year. Failure to enact these tax cuts alongside sports betting revenue could have significant electoral ramifications.

However, the crux of the matter lies in reaching a consensus between tribal interests and racetracks, particularly concerning revenue sharing and exclusivity over online sports betting. The House bill proposes an annual payment of $625,000 to tracks, earmarked for horse racing purses, but negotiations have hit roadblocks.

While tribes remain steadfast in their demands, tracks, represented by entities like Canterbury Park, seek a more equitable arrangement. Legal challenges, including lawsuits filed by tribes and tracks, have further complicated negotiations, with each side vying for leverage.

Reps. Pat Garofalo and Brian Pfarr, advocating for tracks, have called for compromise, emphasizing the potential benefits of historic horse racing as part of the solution.

As the legislative process moves to the Senate, partisan tensions loom large, with a slim margin separating Democrats and Republicans. Sports betting, among other key issues, will be subject to intense negotiations, highlighting the need for bipartisan collaboration.

 

“Certainly the ones that would classify on the higher end as slot machines, those concerns are justified. For other ones, it’s a parimutuel pool, not a random number generator. It is historic horse racing. It is a parimutuel wager. I think that’s something that should be on the table as one of the things we can do to help bridge the gap and help achieve a bipartisan, bicameral agreement.”

 

Conclusions

Rep. Stephenson has pledged to work with Republicans to advance the sports betting bill, acknowledging the importance of cooperation in the final stages of the legislative session.

In the coming days, the fate of Minnesota's sports betting legislation will be determined by the ability of lawmakers to navigate complex political, economic, and legal dynamics. Whether it marks a historic victory or yet another setback remains to be seen, but one thing is certain: the stakes have never been higher.