Minnesota lawmakers are drafting legislation with the hope that the state’s Senate will legalize sports gambling in 2019. To further these efforts, state lawmakers have already started the negotiations required to push the bill through before the end of 2019.
From 1992 to May of this year, sports betting was illegal in all states outside of Nevada due to a federal law named the Professional and Amateur Sports Protection Act of 1992 (PASPA). The Supreme Court overturned PASPA in May, deeming it unconstitutional, and that opened the way for individual states to set their own legislation surrounding sports betting. Currently, the United State Congress is considering a potential legislation to regulate sports betting across the country.
Since the overturning of PASPA, several states have jumped on the opportunity to not only pass legislation, but also get sportsbooks up and running: Delaware, New Jersey, Pennsylvania, Rhode Island, West Virginia, Mississippi, and New Mexico have all enjoyed the revenue raised from legal sports betting. Other states like New York and Arkansas have passed legislation and are just waiting for sportsbooks to open.
The GOP Senator, Roger Chamberlain, says that he expects support from both parties on the bill. Also the Chair for the state’s Senate Taxes Committee, Chamberlain said that they have a rough draft ready to go when the 2019 session starts on January 8. He expects that multiple committees will work on the bill to get it passed:
“It’s touching a lot of folks, and when you’ve got a lot of money involved then people get a little concerned. But I think there’s popular support for it. Admittedly, this is not the top of the list for priorities…but it is certainly something that can get done.”
As of right now, there’s no way of knowing just how much revenue might be involved in sports betting in the state. In Nevada, where the state receives 6.75 percent of each casino’s take, the total amount spent on sports wagers is $5 billion each year. Of that total amount, the hold is around $250 million, meaning Nevada gets about 15.6 million in tax revenue. Of course, Minnesota is not going to make anywhere near that amount, but it will still benefit the state.
This means that lawmakers in Minnesota will have to decide what to tax, how much to tax, and when. They could decide to tax the amount bet or a portion of the hold, which is what the casinos see after paying out winnings.
Representative Pat Garafalo (R-Farmington) sponsored a bill in the 2018 session to include a one percent tax on the total amount bet. Farmington believed at that time that up to two billion dollars could be wagered with legal sports betting in the North Star State.
Chamberlain wants senators to come to a tax rate that isn’t so high that it will discourage people from betting illegally, but high enough that it generates enough revenue. He also wants the state’s Gambling Control Board to oversee sports betting, but Garafalo has suggested a brand-new Sports Wagering Commission.
Another unknown is if the House even wants to legalize the activity. A new DFL majority will control the House when it’s time to vote on the issue.
Laurie Halverson, the Incoming Commerce Committee Chairperson, said there isn’t a bill in the House as of yet. In fact, there’s not even a sponsor for a potential bill. She also said that members of the House will want to know the numbers.
Two lawyers who specialize in Indian affairs and gambling business law, Tom Foley and Kevin Quigley, say that the native tribes in the country aren’t on the same page when it comes to sports betting. For example, the Mississippi Band of Choctaw has an operating sportsbook, but many tribes are waiting and watching to see what other tribes do and how they make out.
In Minnesota, there are 11 tribes that have compacts with the state to run gambling facilities. One of the first such agreements in the country, Minnesota’s agreement with the tribes will likely have to be re-written to allow sports betting. Legislation for state-run sportsbooks, however, doesn’t necessarily have to involve the tribes because the compacts with the tribes don’t promise exclusivity, unlike in other states.
When it comes to legal issues, one that will have to be resolved with the tribes is online or mobile betting. Right now, tribes are permitted to offer gaming only within reservation boundaries; however, what if a smartphone or tablet outside of the tribal boundaries is used to place a bet? If the servers that process the bets are on tribal lands, would that still meet federal laws that regulate the issue?
Last spring, Garofalo said that tribal involvement in the decision-making process is important:
“It is very important for Minnesota that going forward we have the stability in the gambling environment. So doing this without tribal support would be problematic. It would not be good for the state.”
Chamberlain has scheduled some meetings with people who represent the state’s gambling tribes to talk about sports betting:
“I think they most definitely are interested,” he said. “It will benefit the tribes and it will benefit Buffalo Wild Wings or anyone who decides to open a sportsbook. It is a totally different type of gambling than slot machines and cards.”
The group Citizens Against Gambling Expansion plan to oppose any sports betting in the legislature, like they did in the 2018 session. Jake Grassel, the executive director, said:
“We have people across the state telling us there’s just too much gaming, that we don’t need any more. With sports betting in particular, I think there’s a lot of risk with this new dynamic of an online platform, a mobile platform.”
He believes that legal sports gambling will allow the industry to target what he calls the “next generation of gamblers.” He doesn’t believe, though, that any sports betting legislation will pass in 2019 because there are so many questions and concerns around the issue.
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