Minnesota HHR Decision Adds New Wrinkle To Sports-Betting Talks

April 5, 2024
Ongoing sports-betting conversations in Minnesota had an extra layer of complexity added to the mix with a regulatory decision this week to permit racetracks to offer historical horseracing.

Ongoing sports-betting conversations in Minnesota had an extra layer of complexity added to the mix with a regulatory decision this week to permit racetracks to offer historical horseracing (HHR).

Much of the sports-betting debate has centered on the role of racetracks in sports betting, with state Indian gaming tribes and their political supporters pushing for exclusivity for the tribes, while tracks have pushed for their own inclusion in any sports-betting model.

That debate had an extra wrinkle thrown into it Monday (April 1) when the Minnesota Racing Commission voted to permit two racetracks, Canterbury Park and Running Aces, to offer historical horseracing, with up to 500 terminals at each location.

The racetracks argued that the HHR terminals would be permitted under state law as they were dependent on player skill.

“Because patrons may access and analyze handicapping information before placing wagers, patrons with more skill are able to make better wagers and, over time, outperform similarly situated patrons with less skill,” wrote Evan Nelson, an attorney representing the two tracks.

Nelson’s letter was in response to a finding by the state’s Alcohol and Gambling Enforcement (AGE) Division, which wrote in a March letter that it had determined the machines to be a gambling device.

“In considering the physical appearance of the machine … it presents itself as a multi-reel, multi-line video slot machine.

“There is an option that will allow the player to see the historic race being run; however, this dramatically slows the rate of play.”

AGE also noted that although the player who understands handicapping may make choices that affect the game, the mechanism is “not much different than a player of a video poker machine.”

“The video poker machine determines the initial set of cards to be delivered to the player, then a player who understands poker strategy makes choices to impact their rate of return.”

Minnesota Indian Gaming Association executive director Andy Platto called the action “an extreme violation of legislative authority.”

“The commission rejected the opinion of the state’s gaming regulators … who have consistently held that these games are gambling devices just like slot machines and thus are illegal under state law.

“Slot machines not located on tribal land remain illegal in Minnesota,” Platto added. “After decades of debate at the Capitol on the topic, the racing commission decided to usurp legislative authority and unilaterally authorize slot machines at the state’s horse tracks. 

“We will strongly oppose any efforts to implement the commission’s decision, and will be looking at all available options.”

One way the issue could ultimately be addressed is through legislative action on sports betting. House File 2000 would give tribes exclusive rights to offer land-based and mobile sports betting, and would also explicitly prohibit historical horseracing.

The bill’s sponsor, Representative Zack Stephenson, said the commission’s actions were illegal, and rejected suggestions that allowing the tracks to offer historical horseracing could be part of a compromise to ultimately permit the tribes to offer sports betting.

“I disagree strongly that it's an easy way to resolve the issue, and I just want to be very clear with folks, there is no universe in which any bill that leaves this committee is going to authorize historical horseracing at the tracks,” said Stephenson, who is also the chair of the House Commerce Finance and Policy Committee. “That's a total nonstarter, will not happen, will not be part of a sports betting deal. Bright red line in the sand.”

“We are going to clarify the law in this bill to make abundantly clear to a future racing commission that they do not have discretion to do this,” he added. “But I will tell you that if we don't, I fully expect that the racing commission's decision will not survive judicial review.”

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