Minnesota’s New Sports Betting Bill Is A Dead Bill Walking

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Minnesota wants to legalize sports betting. In 2019, lawmakers introduced a sports betting bill. Iowa had recently legalized sports betting, and some lawmakers were feeling behind. However, the bill didn’t even get a hearing in the House. That’s because sports betting legislation won’t go anywhere without getting Minnesota’s tribes onboard. It’s the main economic driver on tribal lands, and the tribes don’t want to sacrifice their financial independence. Minnesota has a long way to go if it hopes to bring sports betting online. That means it won’t be spiting Iowa anytime soon, even with its most recent sports betting bill.

What’s In Minnesota’s Sports Betting Bill?

Minnesota’s sports betting bill has line items that are common to most sports betting industries. It would create a Gaming Commission to create industry rules and oversee licensed sportsbooks. The Gaming Commission can dole out punishments to bad actors in the industry, too. But three sections of the bill make this one stand out from other states:

  • Taxes
  • Cash Reserves
  • Exclusion List

Taxes

Every sports betting state handles taxes a little differently. Some set a high tax rate to try to get everything they can out of it. Others cater to businesses with low tax rates. Minnesota’s current bill would tax online sports betting at 8% and retail sports betting at 6%. Those are some of the lowest tax rates in the country. Minnesota seems to be taking the business-friendly route. A 6% tax rate would undercut Iowa and Nevada’s sports betting tax rates, making Minnesota’s the lowest in the country.

All that tax money would go into the state’s general fund. From there, 0.5% of that sports betting money would go to a special fund. This special fund helps the National Council on Problem Gambling’s state affiliate address problem gambling in Minnesota. Tax revenue has been projected to be $40-50 million, which would direct $200,000-250,000 to address problem gambling.

Cash Reserves

Most states set cash reserve requirements for licensed sportsbooks. It ensures sportsbooks don’t run out of money to pay their bettors. Bills often make sportsbooks choose the larger of:

  • A set dollar amount.
  • A sum of different cash amounts and payment obligations.

Minnesota does that too. However, its hard number is low. In this bill, sportsbooks must have cash on hand equal to whichever is bigger:

  • The sum of three different cash amounts from sportsbook users.
  • $25,000.

It’s unclear why that initial estimate is so low. Other states have set their cash threshold at six-figure numbers. How lawmakers can project $40 million in tax revenue and think that $25,000 had a chance of satisfying the cash reserve requirement is also strange. The sum of sportsbook obligations and bettor accounts will always be larger than that. If the bill survives committee, expect the required cash floor to increase.

Exclusion List

Every state has an exclusion list. It’s a list of bettors who aren’t allowed to wager at sportsbooks and casinos. It’s a potent check on problem gambling and a vital resource for problem gamblers. But once again, Minnesota’s sports betting bill has put its own spin on a common bill feature. Here are the two types of people who can be added to the exclusion list:

  • “Persons who have themselves requested to be on the exclusion list.”
  • “Persons whose names have been submitted, for their own protection, by their legal guardians.”

The first type makes sense. The second is unusual to name. This is either an outsized concern about underage betting or a license for Minnesota conservators to add the people they have power of attorney for. While the intentions seem good, it’s odd to specify that legal guardians can make this decision. If they already have power of attorney, they should be able to add those under their care to the exclusion list, anyway.

Whatever the reason, Minnesota’s sports betting bill is truly its own.

Why Minnesota’s Sports Betting Bill Won’t Pass

Minnesota sports betting will fail this time for the same reason it failed in 2019. Lawmakers want to allow their racetracks and tribal casinos to host sportsbooks, and Minnesota’s tribes won’t allow it. Any off-reservation gambling takes business from tribal casinos.

That business is critical to tribal economic well-being. Most of their money comes from gambling, so they won’t budge on this issue. Here’s what tribal gaming funds in Minnesota:

An identical chart can be found on the Minnesota Indian Gaming Association website. It’s their chart. It’s what gambling funds, and it’s why Minnesota will struggle to deliver a sports betting bill to the governor’s desk.

Theoretically, lawmakers could limit sports betting to tribal casinos. A bill could limit mobile sports betting to tribal lands, too. But that’s unlikely. Minnesota tribes don’t pay state taxes on income earned on tribal lands. A non-tribal government won’t create a new industry that won’t profit non-tribal Minnesotans. The Minnesota legislature and Minnesota tribes are all but certain to remain gridlocked.

About the Author

Christopher Gerlacher

Christopher Gerlacher is a senior author and contributor for Gaming Today. He's a devout Broncos fan, for better or for worse, living in the foothills of Arvada, Colorado.

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