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Just as a Minnesota sports betting effort is beginning to take shape, the Senate bill is landing in a committee it might never escape.
The Senate Taxes Committee made significant changes to SF 1949 on Thursday. But now the bill moves to the Senate Finance Committee, where the chair opposes gambling expansion.
Senate Finance Committee Chair John Marty posted an opinion piece (paywall) Wednesday in the Minnesota Star Tribune calling sports betting “a risky bet for Minnesota.”
In-game wagering prohibition meant to appease Marty
Last week in the Senate Commerce and Consumer Protection Committee, lawmakers removed in-game wagering from the sports betting bill.
Sources tell PlayUSA the move was made to get Marty to allow the bill through his Senate Finance Committee. Marty is one of two Senate members of the Democrat-Farmer-Labor Party who oppose legalizing online sports betting in Minnesota.
That Marty had the opinion piece published after the gesture showed the amendment didn’t work.
In the article, Marty wrote:
“As chair of the Senate Finance Committee, I don’t see legalized sports betting as a big revenue source for the state. I see the reality we face: huge additional cost to taxpayers to address mental health and addiction problems, especially in young people. If we allow these predatory corporations in, we need rigorous safeguards to protect Minnesota from the consequences. We need major changes in the proposals before they are ready for serious consideration.”
Marty continued that if Minnesota is to jump into sports betting, the law must focus heavily on preventing problem gambling and protecting minors. He said he is working with colleagues to ensure any sports betting legislation addresses economic, social and health impacts, including suicide risks, the impact on the integrity of sports and risks to athletes.
At the very least, it seems Marty will hold up the bill in his committee while demanding changes. The Minnesota legislative session runs until May 20.
“The current sports betting legislation would be the largest expansion of gambling in Minnesota history. Instead of going to a casino or other gambling destination, mobile sports betting enables betting 24/7 on your phone, with endless pop-up ads to encourage more betting. This turns occasional sports bettors into problem gamblers, while hiding their gambling from spouses or family members who might be able to intervene before the bettor ends up driving the entire family into unrecoverable debt.”
Minnesota sports betting changes made in committee
No one in the Minnesota gaming industry supports prohibiting in-game wagers, which would likely cut revenues by more than half. A new fiscal report produced after the move lowered revenue projections from $40 million to $18 million.
“I don’t think anyone actually believes the in-game wagering ban will stick,” Canterbury Park CEO Randy Sampson told PlayUSA.
The Senate Taxes Committee doubled the tax rate from 10% to 20%, which could be seen as an effort to compensate for the lost revenue from in-game wagers.
However, sources tell PlayUSA that the tax increase will likely stay regardless of in-game wagers. It is meant to produce more revenue share for other Minnesota stakeholders, charitable gaming and racetracks.
The Minnesota sports betting bill gives a monopoly on sports betting to Minnesota Indian tribes. However, Thursday’s amendments changed what other stakeholders get from Minnesota online sports betting.
Entering the session, Sen. Jeremy Miller told PlayUSA that Minnesota charitable gaming had emerged as a third stakeholder in sports betting legislation. Lawmakers believe they hurt charitable gaming last year with changes to electronic pull-tabs and they want to make up for it.
Thursday, the committee earmarked 20% of online sports betting tax revenue to charitable gaming enterprises, which could be enough to draw support from the industry.
Klein also added promotional credit deductions with a phaseout. Minnesota sports betting operators can deduct 100% of promotional credits for the first three years. Deductions are reduced by 25% each of the following three years before phasing out.
Racetracks not on board with changes
The Taxes committee also altered revenue share for Minnesota’s two racetracks.
Instead of giving the tracks 30% of a 10% tax capped at $3 million after the first $20 million, the bill now provides tracks 5% of a 20% tax uncapped. But that doesn’t figure to exceed the previous $3 million cap, even if in-game wagering is back in play.
“We are going backwards,” Sampson told PlayUSA.
The amendment also provides Canterbury Park with a larger portion of the racetrack share. Instead of splitting the pot 50-50 with Running Aces, Canterbury Park would now get 78% of the fund, with Running Aces getting the remaining 22%.
