Lawmakers, gambling interests to make another push for legal sports betting in 2023

The gambling industry is salivating at the prospect of fully legal sports betting in Minnesota, which offers a market of millions of fans rooting and potentially betting on teams from professional sports leagues and universities.

The revenue potential for these companies is huge: From mid-2021 to mid-2022, Minnesotans spent over $4 billion on pull-tabs — both paper and electronic, according to the Minnesota Gambling Control Board. And legal sports gambling here would likely mean far more money for the house given the added excitement of live sports: Americans wagered nearly $80 billion on legal sports betting from January to November of 2022, according to SportsHandle, a trade publication.

Sports betting has exploded since the U.S. Supreme Court in 2018 overturned a law that banned all states except Nevada from the business. Since the decision, 31 states have legalized sports betting in some form, and some lawmakers, gambling companies and their allies in the sports leagues are hoping the new legislative session means Minnesota could be next after a failed effort in 2022. 

One sign of the interest in the North Star State: The presence of influence operations. In the past year, an East Coast lobbyist named Patrick Gibbs registered in Minnesota to represent gambling companies like BetMGM, Bally’s and FBG Enterprises. Draft Kings and FanDuel retained Capitol fixture Paul Cassidy of Stinson in 2020, after the companies pursued a failed effort in 2016 to codify legalized fantasy sports in Minnesota.  

Despite the strong push of gambling companies and the backing of a key DFL lawmaker, the effort to legalize sports betting here faces some critical hurdles. 

Minnesota lawmakers considered legalizing sports betting in 2022, but the idea stalled when legislators couldn’t agree on who would control the new market, i.e., who would make most of the money.

The DFL-controlled House worked closely with the tribal nations to create a sports betting bill that wouldn’t hinder tribal nations’ casinos, and only granted mobile sports betting licenses to the tribes. Gov. Tim Walz has previously indicated he won’t sign a bill without the tribes’ approval.

Lt. Gov. Peggy Flanagan is a member of the White Earth Nation, and Walz has taken a special interest in the welfare of Indigenous people and the protection of tribal sovereignty. 

Tribes enriched by gambling money have also been important contributors to DFL campaigns. 

The Shakopee Mdewakanton Sioux, which owns and operates the Mystic Lake Casino in Prior Lake, contributed over $300,000 to DFL caucuses and candidates for the November election, according to campaign finance filings.

The Prairie Island Indian Community, which owns and operates the Treasure Island Resort & Casino, contributed over $250,000 to DFL caucuses for the November election.

Both tribal nations also gave money to Republican committees and candidates for the election, though not as much. The Shakopee Mdewakanton Sioux contributed about $100,000 to Republicans, and the Prairie Island Indian Community also contributed approximately $100,000.

In a statement to the Reformer, the Minnesota Indian Gaming Association (MIGA) said it supports sports betting at tribal-owned casinos and mobile platforms.

“Tribes are best positioned to provide this new offering to the state’s consumers,” said MIGA Executive Director Andy Platto. He said MIGA will work to develop an approach that “benefits Minnesotans while protecting the Indian gaming operations that tribal and rural communities rely on for jobs and economic health.”

The state Senate last year drafted a sports betting bill that would have allowed mobile sports wagering licenses for Minnesota’s two horse racing tracks — Canterbury Park in Shakopee and Running Aces in Columbus. Tribes have long been opposed to non-tribal gaming, as casinos are one of the few major sources of revenue for tribes.

Rep. Zack Stephenson, DFL-Coon Rapids, told the Reformer that he plans to lead the legal sports betting push in the House and introduce a similar bill to the tribal-friendly bill he offered last year.

Stephenson, who characterized himself as a non-gambler, said legalizing sports betting — like legalizing marijuana — would allow for regulation and consumer protection.

“This is not supposed to be a revenue-maker for the state of Minnesota, and I think it’s a bad idea to legalize sports betting just to fund the state’s treasury, nor do we need to do that right now,” Stephenson said, citing the state’s projected $17.6 billion budget surplus.

Last year’s sports betting bill proposed a 10% state tax on net revenues raised online, which the Department of Revenue estimated would generate about $17.5 million for the state over two years. 

Ten percent of that tax revenue would go towards regulation, while 40% would be allocated for grants to address problem gambling — people who have lost control. The grants would create awareness of problem gambling and fund gambling treatment programs. The other half of the tax revenue would be spent to support youth and amateur sports.

Under the proposed legislation, tribes could create their own sportsbooks and betting operations, or they could partner with one of the major sports betting conglomerates, like FanDuel, DraftKings, Caesars or MGM.

Many Minnesotans are currently placing illicit mobile sports betting wagers through offshore websites, Stephenson said. Because that’s happening outside the purview of Minnesota regulators and tax authorities, Stephenson said, those gamblers have no consumer protections and gambling companies don’t pay Minnesota any taxes. 

It’s unclear whether a sports betting bill has enough traction at the Legislature. At a Minnesota Chamber of Commerce event on Wednesday, state House and Senate leaders were asked about the likelihood of sports betting being legal for the start of the Minnesota Vikings’ 2023 season.

Most of the leaders from the House and Senate said the chances are 50-50. But Senate Minority Leader Mark Johnson, an East Grand Forks Republican, said the odds were less than 50%.

Not everyone in Minnesota wants to see sports betting legalized in the state. The religious right has long opposed the expansion of gambling. Others, like recovering gambling addict Terra Carbert, are worried about the potential impacts it could have on fostering gambling addiction.

Carbert founded a recovery program and now hosts an addiction podcast. She believes there’s little awareness of the dangers of gambling addiction, and she would like to see lawmakers proceed with caution because legalizing sports betting means Minnesota may have more addicts.

A recent study commissioned by the Minnesota Department of Human Services found that more than 200,000 Minnesota adults are either problem gamblers (56,000) or at-risk (162,000). More than one in five Minnesota adults say they have been “negatively affected by the gambling behaviors of a friend, family member, coworker, or someone else they know personally.” 

Carbert said she fears Minnesota’s current gambling addiction awareness and recovery resources are not enough to sustain an influx of addicts. “If we’re going to do this, we better make sure that everybody knows how to get help.”

“The exposure (of sports gambling) to more of the population, more people having access, means more people becoming addicted. Are we ready?” Carbert asked.

Recent reporting indicates young men, who are drawn to both sports and video games, are especially susceptible to the compulsion potential of online sports betting, which offers dozens of chances to bet during a single game.