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Lawmakers Nearly Succeed In Stripping Sports Betting From Minnesota Sports Betting Bill

Written By Matthew Kredell | Updated:
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Many Minnesota House representatives don’t believe Minnesota sports betting legislation stands a chance in the Senate this session amid escalating fighting between Minnesota Indian tribes and the state’s horse racing industry.

Tuesday in the House Taxes Committee, an amendment to strip HF2000 of sports betting and daily fantasy sports regulation, leaving only a tax cut for charitable gaming, failed by a single vote, 9-10-2. Committee Republicans led the vote to remove sports betting.

Rep. Greg Davids, who sponsored the amendment, said he supported fixing the tax rate for charities but not legalizing sports betting.

“What we did last session was a huge mistake, devastating for our charities. … Now when we’ve realized what we did, we’re trying to fix it. And we put it in a bill that, to some of us, is extremely objectionable. … It’s somewhat unfortunate that they’re going to go another year with nothing because this bill will not pass. It will probably pass the House, but not the Senate.”

After much conversation about how the bill is going nowhere and lawmakers need to find another way to address concerns of charities, the committee advanced HF2000 by a 12-9 vote.

With the legislature struggling to approve sports betting, Minnesota online casinos have not been a topic of discussion in the state. If Minnesota or any other state files online casino legislation you can keep an eye on it with our online casino bill tracker.

Beef between tribes and tracks goes beyond sports betting

The Minnesota House passed a sports betting bill with exclusivity for Minnesota’s 11 Indian tribes in 2022. However, Minnesota Senate Republicans supported horse racing benefiting from the bill.

Minnesota’s two tracks, Canterbury Park and Running Aces, and tribes appeared close to a revenue sharing agreement at the end of last session. However, negotiations broke down almost immediately this year. Here’s what happened:

  • Tracks asked in January for the Minnesota Racing Commission to approve historical horse racing.
  • In March, the Senate amended sports betting bill SF1949 with a new revenue sharing offer from tribes that the tracks deemed a downgrade.
  • At the beginning of this month, the commission approved 500 HHR machines for each track.
  • Days later, Rep. Zack Stephenson added an HHR prohibition to HF2000. He also filed a standalone HHR prohibition, HF5274, that further codifies games the tracks cannot offer.
  • Minnesota’s biggest gaming tribe, the Shakopee Mdewakanton Sioux Community (SMSC), then filed a petition with the state Court of Appeals to overturn the commission’s HHR approval.
  • Running Aces responded by filing a lawsuit against three Minnesota tribes in US District Court alleging they violated the federal RICO Act by offering illegal card games.

Rep. Jon Koznick offered an amendment removing the historical horse racing ban. It lost 8-9-4.

“I think there should be big concerns with the provisions in the bill that block the horse tracks from continuing to be economically viable. … We’re changing the rules in the middle of the race. There is a case being tried through the courts on whether the Minnesota Horse Racing Commission has the authority to permit the historical horse racing. What this bill does and those provisions, it closes the starting gate before the race gets off to start. That’s not the legislature’s purview.”

Charities could be most impacted by Minnesota sports betting failure

Last year in a tax omnibus bill, the Minnesota legislature outlawed certain electronic pull tab games offered by Minnesota’s charitable gaming industry. The games had already been hit with a negative court decision following a legal challenge by Minnesota tribes.

Charities project lost revenue and negative effects on the community when the changes go into effect next year. Stephenson reached a deal to use online sports betting revenue to give charities a tax break that could amount to $40 million, gaining their support for HF2000.

Allied Charities of Minnesota Executive Director Rachel Jenner and Kristy Janigo from the American Legion Department of Minnesota both spoke in favor of the bill at Tuesday’s committee meeting.

While some committee members called for a standalone bill to provide these tax breaks to charities, that appears unlikely. As Stephenson pointed out, the Minnesota sports betting revenue pays for the tax breaks.

“The financing for the tax cuts for the charities is this wagering on sports betting, the tax on sports betting, which would be eliminated by the amendment. Which means that there’s no pay-for for the tax cuts that are proposed here.”

Rep. Dave Lislegard commented on the disappointment of the charitable organizations and encouraged them to keep advocating for the bill, saying he was not giving up on the Senate.

“I watched everyone come up today and testify in favor of the bill. No one came and said they were against the bill. And then when I heard everybody having conversations that this bill is not going to go anywhere, I looked over at the veterans over there and watched their demeanors change as this hearing went on. And I feel for you, because basically you were told that this has no chance.”

Three weeks left for Minnesota sports betting compromise

Rep. Bjorn Olson seemed to be trolling when he thanked his colleagues for 45 minutes of discussion that helped in “gaining more knowledge on how we can make a better bill for next year, next session.”

Olson added:

“I think that with the nonsense that is going on in the Senate that borders on criminal, we probably will not see this bill pass this year, which is why it’s really sad for me personally that we could not at least take care of our charities.”

As always, Senate chances appear to depend on the tribes and tracks reaching an agreement on sports betting revenue share, and now the HHR issue, in the next three weeks. Minnesota’s legislative session concludes May 20.

Stephenson isn’t giving up on passing Minnesota sports betting legislation in 2024.

“I appreciate the conversation today, though not necessarily the prognostication. There’s a long way to go left in session, and nothing is ever dead until sine die is one of the oldest cliches about this place, but it’s because it’s true. So let’s keep working would be my ask of my colleagues.”

Photo by Ryan Sun/AP photo
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Written by
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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