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Rep. Zack Stephenson made a few changes to his Minnesota sports betting bill Tuesday and revealed a couple to come.
Stephenson disclosed that he would raise the minimum age requirement from 18 to 21. Additionally, he established a 10% tax rate for mobile sports wagers.
He also added amendments detailing how the state would combat problem gambling and fleshing out grant programs related to youth sports.
But Stephenson’s House File 778 faced a lot of pushback Tuesday. It barely got through the State Government Finance and Elections Committee by a 7-5 vote.
Opposition from Minnesota gaming entities left out
Most of the opposition came from representatives of charitable gambling and horse racing organizations.
Sam Krueger of the Electronic Gaming Group explained that referring to tribes as the only gaming experts in Minnesota ignores the nearly $3 billion charitable gambling industry.
“We are not against sports betting in general. But we are against bills that allow our chief competitors, the tribes, to vastly expand their operations outside of their existing jurisdictions without allowing the charities a reasonable path to compete and grow going forward. … The tribes are not the only game in town when it comes to gambling, and this bill is picking winners and losers in this industry.”
Krueger added that charitable gambling takes place in every committee member’s district. And revenue from charitable gaming goes toward youth sports, veterans programs, and community groups.
Stephenson said he was not opposed to giving charitable gambling a break by providing tax relief for pull tabs in another bill.
Justin Anfinson of Minnesota Harness Racing, Inc. asked lawmakers to include the state’s two horse racetracks. The Senate sports betting bill does include the tracks.
“Horse racing in Minnesota is already at a competitive disadvantage with many racing jurisdictions around the country,” Anfinson said.
“As gaming options such as racinos, historical race wagering and mobile sports betting have expanded, many states across the country with horse racing tracks within their borders have tied a portion of the revenue from the new forms of gaming to purses.”
When is a monopoly not a monopoly?
Rep. Jon Koznick asked Stephenson for his logic in giving Minnesota tribes a monopoly on sports wagering.
“I strongly disagree with your characterization that this a monopoly,” Stephenson said. “The bill authorizes up to 11 operators to be in the market. We anticipate it will be a very competitive marketplace.”
The House bill does give one industry a monopoly on sports betting. But the 11 tribes, while sometimes allies, also are competitors. And the mobile sports betting platforms with which they partner will compete for Minnesota wagering dollars.
Koznick pointed out that states such as Iowa, Illinois, and New Jersey all provide sports wagering licenses to horse tracks.
“I’m still trying to figure out why you’d exclude two of the most obvious properties that should reasonably be included in this, and obviously the Senate has included these properties,” Kosnick said. “I think you’re missing an opportunity to garner by excluding other properties in the state that are very well versed in this and have a good reason to be included.”
Rep. Jim Nash attested that he’s heard from many bars and charitable organizations in his district who fear that sports wagering will cause a precipitous decline in their pull-tab operations.
Stephenson responded:
“I don’t believe it will have an impact on the physical pull-tab or electronic pull-tab markets. Minnesotans are spending multible billions of dollars [on sports wagering] every year. It’s a black market, and we’re trying to move it into the legitimate market. This is not going to diminish the dollars spent playing pull tabs in of our charities. What we’re going to do is take money from offshore websites and move it into legitimate websites that follow our regulations, protect consumers and pay our taxes.”
Lawmaker says Minnesota sports betting not about revenue
Stephenson had an easy rebuttal for committee who thought the state was making a money grab with what they’re calling the largest expansion of gambling in Minnesota in 40 years.
He pointed out that none of the revenue goes to the general fund. A massive 40% of the tax revenue goes to addressing problem gambling issues, far more than any other sports wagering bill ed in the US. And another 40% goes toward youth sports and sports integrity programs.
“The state has a $9 billion surplus,” Stephenson said.
“This is not about generating revenue. All of the funds we generate from this go to related activities – the consumer protections and licensing and regulation, the problem gaming aspect and then youth sports.”
Stephenson stressed that the bill is about regulating the industry and protecting consumers.
“If you place a bet on a shady offshore website, you have no remedy if you’re cheated,” Stephenson said. “And so we can protect consumers. Those offshore websites don’t care about problem gamers and there’s no protections in place to deal with the impacts that they have on society.”
What’s next for Minnesota sports betting effort
The House sports betting bill still has multiple committee stops remaining. Stephenson said he would amend the minimum age requirement to 21 in the Judiciary Finance and Civil Law Committee. He’ll add the 10% tax rate to the Taxes Committee.
The bill is not on the initial agenda for either committee Thursday.
The Senate has yet to take up sports wagering bill SF 574. However, the bill needs to move soon. There’s a March 25 deadline for it to advance through a committee.
Sen. Roger Chamberlain, a sponsor of the Senate legislation, told PlayUSA that he expects the House and Senate to differing bills and settle the differences in the conference committee.
