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Senator Reveals Minnesota Sports Betting Proposal That Benefits Horse Racing Tracks

Written By Matthew Kredell | Updated:
Minnesota Sports Betting Effort Continues

A Minnesota senator offered the horse racing industry a way to benefit from Minnesota sports betting. But it wasn’t enough to end the opposition from Minnesota’s two horse racing tracks.

Sen. Matt Klein proposed four amendments to his SF 1949 Wednesday in the Senate State and Local Government Committee.

One dedicated 30% of the state’s intake from online sports betting to the horse racing industry.

Gaining horse racing support for a tribal exclusivity model of Minnesota sports betting is the biggest obstacle to bill passage. Minnesota tribes and professional sports teams support the legislation as it stands.

Senator offers horse racing compromise

Lawmakers in the Senate and House have tried to facilitate discussions between the state’s tracks and Indian tribes. But bill momentum has stalled as the sides failed to reach a compromise.

A House companion bill from Rep. Zack Stephenson, HF 2000, hasn’t seen action in seven weeks.

Klein tried to move bill SF 1949 forward by essentially offering the horse racing industry 3% of online sports betting revenue. The 3% would come from the 10% revenue share provided to the state.

But the offer had the following caveats:

  • 30% of the state’s mobile sports betting revenue goes to the newly created Horse Racing Economic Development Fund.
  • After the first $20 million goes to the fund, the contribution gets capped at $3 million per year.
  • Directs that money put into the fund go toward mental health programs for jockeys, stewards and backstretch employees, increasing compensation of backstretch employees, funding research projects to study equine illness and disease, performance-related accidents and industries, and improvements in breeding techniques with a study coming back to the legislature.
  • Allows advanced deposit wagering at Minnesota horse racetracks.
  • Reiterates that historical horse racing machines are illegal.

Klein called the amendment a “good-faith effort to try to accommodate and sustain the tracks.”

“I believe you will hear in testimony today that the two tracks in Minnesota do not currently support this legislation. We have worked hard throughout session to try to garner that support and honor the fact that those are destinations in Minnesota that have a significant contribution to the Minnesota experience.”

Andy Platto, executive director of the Minnesota Indian Gaming Association, said the tribes took no position on the amendment. If it were to go on the bill, Platto said MIGA would remain in support.

Horse racetrack response to Klein’s proposal

Canterbury Park CEO Randy Sampson and Running Aces CFO Tracie Wilson said Klein’s proposal wouldn’t make up for the horse racing revenue they would lose because of sports betting.

“History has shown that this type of expansion of gambling will cause the loss of significant economic benefit to the Minnesota horse industry and the state of Minnesota,” Sampson said. “Sports betting in other states has resulted in minimal decreases in slot revenue. However, wagering on horse races and table games as we have at our racetracks has seen a much larger negative impact.”

Sampson added that the racetracks did not receive the proposal until late the previous day.

Wilson continued to ask for direct participation of horse racetracks in sports betting.

“To our knowledge, in all states with legalized sports wagering, racetracks have not been prohibited from participating in sports wagering,” Wilson said. “Minnesota should be no different.”

Klein once again shut down that option.

“This bill has been amended along the way but one principle which has never been violated, nor will be violated, is tribal exclusivity over these licenses,” Klein said.

Possible solutions offered by Minnesota horse racetracks

Sampson said the 30% pledge provided a meaningful level of support for the horse industry for the first few years. But then the cap comes into play.

“Our main concern is that it creates a funding cliff by putting a future cap of $3 million per year on the Horse Racing Economic Development Fund. That amount when split between two racetracks and three horseman groups would not be adequate to provide the level of support needed to keep horse racing in Minnesota viable in the face of the expansion of gambling that mobile sports betting will produce.”

So perhaps a lifting of the cap could be enough to get Minnesota sports betting to the finish line.

“We believe it’s in the best interests of the state for all the stakeholders to work together to make sports betting successful,” Sampson said. “Putting a cap on the revenues to the horse racing industry does not provide the inventive needed for a collaborative approach.”

Wilson referenced a deal the track tentatively made with some tribes last year, as first reported by PlayUSA.

“One option under the sports betting bill that was considered last year was to allow craps and roulette at the state’s two racetracks and at the Native American casinos,” Wilson said. “This would provide a revenue source that would help all constituents.”

So perhaps adding craps and roulette to Klein’s amendment could be the path to Minnesota sports betting passage.

Committee changes to Minnesota sports betting

Despite the horse racetrack opposition, Klein’s proposal for the Horse Racing Economic Development Fund was one of four amendments adopted by the committee Wednesday at Klein’s behest.

Key details of the other three amendments included:

  • Ensures that all license holders start on the same date so that no one gets an advantage.
  • Allows the transfer of platform provider licenses with permission from the commissioner.
  • Changes the existing advertising restrictions to more targeted advertising restrictions on college campuses.
  • Grants the Commissioner discretion on whether to make rules related to advertising frequency.
  • Adds the 1-800-GAMBLER hotline to be included on all advertisements.
  • Removes mandate for DPS Commissioner to adopt rules on advertising content restrictions and limitations on the total number of wagers placed by consumers.
  • Deletes prohibition on push notifications for mobile sports betting apps. Instead, it adds an opt-in requirement to get those push notifications.
  • Clarifies that licensing requirements can only apply to those who work full-time on the sports betting operation. They would not apply to tribal leaders, members, hotel or casino staff who do not work on sports betting.
  • Enables foregoing a criminal history check if the employee has had one in another state within 12 months.
  • Platforms and license holders need to ensure they can pay bets through bonds, letters of credit and other mechanisms other than cash reserves.
  • Instructs the Big-10 Conference to oversee codes of conduct for participants at the collegiate level rather than the NCAA.

“These add common-sense protections for Minnesotans while also ensuring that the new industry will be capable of attracting wagerers away from the illicit market and into this more structured, legal market,” Klein said.

Minnesota sports betting committee passage delayed

The committee heard the sports betting bill at the end of a long, two-part meeting.

Committee Chair Sen. Erin Murphy said she would hold over the bill until next week. That would give members time to consider the proposal and ask questions.

“I’ve made a commitment that we’re going to come back and finish it, hopefully early next week, because I know you have further stops,” Murphy said.

Klein agreed with the decision.

“I’m grateful for the time you’ve given to this today and I actually agree with you. This is a significant change for the state of Minnesota, this is the last policy committee in which it will be heard, and we should do it right rather than do it fast.”

There is, however, some urgency. The Minnesota legislative session concludes May 22.

Photo by PlayUSA
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Matthew Kredell

Matthew Kredell serves as senior lead writer of legislative affairs involving online gambling at PlayUSA. He began covering efforts to legalize and regulate online gambling in 2007 after federal passage of the Unlawful Internet Gambling Enforcement Act disrupted his hobby of playing small-stakes online poker. He has since interviewed more than 300 lawmakers around the country and written extensively about online gambling legislation. He has led coverage of bills to legalize online gambling in most states. A lifelong Angeleno and USC journalism alum, Matthew started his career working as a sportswriter for a decade at the Los Angeles Daily News. He has written on a variety of topics for Playboy Magazine, Men’s Journal, Los Angeles magazine, LA Weekly and ESPN.com.

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