Minnesota Sports Betting Bill Clears Fourth House Committee

Nearly a week after clearing the third committee, the Minnesota sports betting bill passed through the fourth House committee on Thursday.

House File 778 – sponsored by Rep. Zak Stephenson – cleared the House Taxes Committee by a 13-5 vote on Thursday afternoon. The measure that would legalize in-person and online sports betting in Minnesota now moves to the House Ways and Means Committee. If the fifth committee also clears the proposal, it will then be discussed on the House floor.

The bill has already passed through the Commerce, Finance and Public Policy and State Government Finance and the House Judiciary Finance and Civil Law Committees.

HF 778 would legalize statewide mobile betting at Minnesota’s 11 tribes, which would retain all the profits from their casinos, besides getting 5% of the money wagered online.

Any major operators such as BetMGM can offer sports betting in the Gopher State after partnering with one of the tribes.

‘Time has Come’ for Legalizing Minnesota Sports Betting

The bill sponsor began by offering a brief overview of the proposal to the committee, reiterating that sports betting is already happening in Minnesota. Stephenson said during the hearing that Minnesota has a “very robust black market, estimates in excess of $2 billion.”

HF 778 is about creating a legal marketplace that would displace the unregulated market and will provide consumer protection, ensure the integrity of the game and limit illegal activities, including money laundering.

The lawmaker argued that all of Minnesota’s surrounding states have legalized some form of sports wagering – whether retail or online or both. Stephenson reiterated the need to legalize sports betting correctly, and that was the reason he had discussions with the state’s 11 native tribes, besides the University of Minnesota and professional sports teams, when drafting the bill.

Stephenson’s proposal allows betting on collegiate sporting events, including those involving local schools.

Stephenson said sports betting “is an idea whose time has come.”

Tax Details

Under its current language, the state would receive 10% of the tax revenue from statewide online sports betting. Minnesota’s 11 tribes would control mobile and retail sports betting in the state. Tribal casino sports wagering revenue is not taxed.

Stephenson also told the Tax Committee that the revenue would contribute to the regulations and consumer protections. Problem gambling, which Stephenson said is a real problem, will get 40% of the revenue. He termed it “the largest investment, by far, of online tax revenue of any state in the country.”

Another 40% would be reimbursed to youth sports and other youth programs across the Gopher State, mainly focusing on areas experiencing juvenile crime.

Some Disagreements from Stakeholders

Some committee members voiced concerns regarding the tax rate and its impacts on charitable gaming organizations. The lack of access to charitable gaming organizations in the proposal was considered problematic.

Minnesota levies charitable gaming organizations a 30% tax rate – three times higher than proposed for sports betting in the bill.

Sam Krueger, executive director of the Electronic Gaming Group, also spoke during Thursday’s hearing.

“The proposal will create a tax disparity between our gambling and the one that would be legalized in the state,” Krueger said. “This unfairness will impact every single one of your communities and the charities that serve them.”

Krueger said his group doesn’t have any issue with tribal establishments not being taxed on their land. But he voiced concern over statewide online sports betting extended through those tribal casinos not being taxed similarly to charitable gaming organizations.

The Taxes Committee had similar concerns while passing the Minnesota sports bill 13-5. But it hopes the tax disparity issue will be addressed at the next stage.