Minnesota Sports Betting Still Facing Strong Tribal Opposition

October 14, 2021
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Minnesota lawmakers are expected to reconsider legislation next year that would legalize sports betting, but any bill likely needs the support of gaming tribes that oppose any form of gambling expansion.

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Minnesota lawmakers are expected to reconsider legislation next year that would legalize sports betting, but any bill likely needs the support of gaming tribes that oppose any form of gambling expansion.

"The tribes are very powerful at the legislature," said Tom Foley, a partner with Foley Quigley Law in the state capital of St. Paul.

"The tribes are not unanimous in opposition to sports betting, but to move forward the tribes will need to reach an agreement on any legislation."

Foley said he believes Governor Tim Walz, a Democrat, would want that agreement before signing any sports-betting legislation.

Any changes to Minnesota's tribal gaming compacts would have to be negotiated and approved by the tribes and lawmakers, and then the governor, before being forwarded to the U.S. Department of the Interior for approval.

Currently, the compacts limit tribal casinos to slot machines and blackjack. Both the state and tribes agreed more than 30 years ago that the compacts should be effective in perpetuity.

The Minnesota Indian Gaming Association (MIGA) has consistently opposed sports betting since the Supreme Court overturned the federal ban in May 2018.

Andy Platto, MIGA's executive director, declined comment to VIXIO GamblingCompliance on the potential of sports betting in Minnesota beyond the organization's position statement: "The Minnesota Indian Gaming Association continues to oppose the expansion of off-reservation gambling, including the legalization of sports betting."

Each of the 11 gaming tribes in Minnesota has two compacts: one for Class III video games or slot machines, and one for blackjack.

Those compacts were originally negotiated by former Democratic Governor Rudy Perpich in 1989, making them the oldest tribal-state gaming compacts in the nation.

The compacts do not provide for any revenue sharing with the state beyond an annual fee for state regulatory costs, noted Kathryn Rand, co-director of the Institute for the Study of Tribal Gaming Law and Policy at the University of North Dakota.

Rand said the Shakopee Mdewakanton Sioux Community's lucrative Mystic Lake Casino some 30 miles (48km) southwest of the state capitol in St. Paul appears to "invite state lawmakers to see sports betting, and perhaps particularly the possibility of mobile sports betting, as a way to leverage revenue sharing from tribes."

But Rand noted that the tribal gaming market in the northern half of the state is more modest and rural.

"Understandably, tribes in Minnesota are reluctant to open the existing compacts to renegotiation, as they have had an extraordinarily stable business environment that has benefited both the tribes and the state."

Additionally, Rand said, the tribes in Minnesota appear to have taken the quite reasonable position that the current U.S. sports-betting market is very much in flux, and that it might be worth waiting to see how the market shakes out in other states.

"As more states legalize sports betting, especially mobile sports betting, the competitive market is shifting," Rand said. "This makes it a challenge for tribes to negotiate fair compact provisions, especially with regard to revenue sharing, as they need to predict the economic value of operating sports betting in a highly dynamic market."

"While following the tribes' preference to take things slow means that Minnesota may lose out on state revenue that would be generated by legalized sports betting, it would allow the state and tribes to partner on thoughtful legislation that serves both the tribes and the state in the near and long term," she said.

Minnesota is bordered by four sports betting states in Iowa, South Dakota, North Dakota and Wisconsin, where the Oneida Nation is expected to open a sportsbook at their Green Bay casino in November.

With football season in full swing, the Iowa Racing and Gaming Commission reported that wagering handle in September increased 94 percent from $108.4m in August to a record $210.4m.

Wes Ehrecke, president and CEO of the Iowa Gaming Association, said Iowa casinos do not report the numbers of out-of-state residents who wager in Iowa, but "we know they do come [from] several bordering states that do not have legalized sports betting."

Minnesota Republican state Representative Pat Garofalo, who has authored several sports-betting bills that have come up short in the state House of Representatives, was unavailable for comment but told the Minneapolis Star-Tribune last week that it has been very hard to prioritize sports betting in the middle of a pandemic.

Garofalo said for any bill to gain momentum next year, supporters will have to present a "unified voice" to generate more serious discussions.

Minnesota's major pro sports teams are interested in legal sports betting, with the Minnesota Vikings of the NFL having "communicated to both legislative leaders and the governor's office, as well as the tribal relationships we have, is that when it does come time for debate, we want to be at the table," according to Lester Bagley, Vikings executive vice president of public affairs.

Still, the tribes “have an important voice and stake in this," Bagley told the Star-Tribune. "We need to make sure this conversation goes forward in a way that works for them."

Earlier this year, Garofalo and Democratic Senator Karla Bigham introduced bills in both chambers of the legislature to legalize sports betting, but they failed to gain traction.

Both bills proposed a 6 percent tax on gross revenue for retail wagering and 8 percent for mobile wagering, while creating a new Sports Wagering Commission to regulate sports betting.

A previous attempt by Garofalo and state Republican Senator Roger Chamberlain to legalize and regulate sports betting also fell short.

In 2019, the Senate Taxes Committee, which Chamberlain chaired, advanced his bill to allow sports betting at tribal casinos and Minnesota's two racetracks. Senate Bill 1894 would have also allowed mobile wagering within the state.

However, the bill stalled in the Senate Government Finance and Policy and Elections Committee, while a separate bill by Garofalo never got a hearing before members of the House Commerce Committee.

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