Minnesota Representative Zack Stephenson revamped his HF 2000, adding daily fantasy sports, allowing for electronic pull-tabs, and doubling the proposed tax as a legal sports betting bill began moving through the house on 21 March.
Stephenson has been championing legal statewide digital sports betting for at least three years.
The A-21 amendment passed 8-4 with the bill approved 8-5 and it is now headed to the tax committee. There is no crossover deadline in Minnesota, which is set to adjourn 20 May. But if sports betting isn’t legalised this session lawmakers will have to craft new bills for the 2025 session as bills do not carry over.
Minnesota lawmakers have been trying to legalise sports betting since 2018. In 2022, Stephenson was able to get his bill through the house, but not the senate.
A key issue has been whether or not the state’s horse tracks should be included in offering wagering. A senate bill that has been through six committees does include the horse tracks and now sets the tax rate to 20%. That bill is now on its way to the finance committee.
Pulltabs are a political football
The latest amendments would put a regulatory structure around fantasy sports, which are currently unregulated. Stephenson did not share any particulars when introducing the amendment, which is not yet publicly available.
But the critical part of the amendment centres around pulltabs and charitable gaming. Stephenson said that, in the current setup, the state of Minnesota gets the most amount of revenue from charitable gaming, followed by the game developers and then the charitable organisations. He said the amendment would flip that scenario and would potentially send $40m to the Allied Charities of Minnesota (ACM) over multiple years, although he did not specify how many.
According to the Minneapolis Star-Tribune, there has been a disagreement brewing around how the pulltab machines work. As technology advances, the machines are getting dangerously close to resembling slot machines, say the state’s tribes, who have exclusivity for casino games.
Minnesota Sports Betting Update. We are making progress, but not there yet. It’s time to get this done! pic.twitter.com/kt6FHbQKJx
— Jeremy Miller (@jeremyrmiller) March 20, 2024
State Democrats in 2023 passed a law that would ban an “open-all” feature on pulltabs. Instead, each tab on the game must be opened individually, which the ACM says slows down consumers and ultimately could affect ACM income because games take longer.
While pulltabs and charitable gaming aren’t directly related to sports betting, they have the potential to be a political football and Stephenson is attempting to take that out of play. In order to increase income to the ACM, the amendment would increase the proposed tax from 10%-20%.
Horse tracks still want in
During the meeting, the committee also heard from a representative from Running Aces, one of the two tracks in the state. CFO Tracie Wilson testified that tracks would be “badly damaged by the unfair amendment” and that horse racing would be “eviscerated by this leglislation, which picks winners and losers”.
Andy Platto, executive director of the Minnesota Indian Gaming Association (MIGA), said that the tribe continues to “evaluate” the bill and that some of the policy changes “are of concern to tribal leaders”. Despite that, he gave MIGA’s support to move the legal Minnesota sports betting bill forward. Minnesota’s 11 tribes are part of the association, which historically has not supported any bill that includes the tracks.
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 costs to taxpayers in mental health and addiction problems. #mnleg #sportsbettinghttps://t.co/2imEXKq8LW
— Senator John Marty (@JohnMarty) March 14, 2024
Stephenson told the Star-Tribune that he’s been working with the ACM and tribes for several years and the current deal is one that “both sides can live with”.
The bill moving through the senate has already been amended to increase the tax rate to 20% and to eliminate in-game betting. The senate bill does not include the tracks. It also does not include the latest pulltab agreement that Stephenson has brokered.
