Minnesota Sports Betting Efforts Hampered by Complicated Gaming Environment

Posted on: January 26, 2022, 07:57h. 

Last updated on: January 26, 2022, 12:22h.

The Minnesota Legislature reconvenes next week. And when lawmakers gather in Saint Paul, the odds are good that efforts to legalize sports betting will reignite.

Minnesota sports betting casino tribal compact
A welcome sign in Minnesota greets travelers. Sports betting has yet to be greeted in the state, but some lawmakers hope that changes during the 2022 legislative session. (Image: Shutterstock)

Minnesota is bordered by four states, and sports betting is legal and operational in each. Regulated sports gambling recently started in Wisconsin and in tribal casinos in North Dakota after the states amended Class III compacts with tribes seeking sports betting privileges.

Minnesota, home to only tribal casinos, could now follow Wisconsin and North Dakota’s lead and amend tribal compacts to include sports wagering. But lawmakers have struggled to find common ground that appeases the state and tribal interests. Adding to the legal juggernaut are commercial entities that are also seeking entry into the sports betting market.

Nearby Iowa was one of the first states in the country to allow its commercial casinos to run sportsbooks beginning in 2019. The state additionally allows mobile sports betting.

Simarly, South Dakota casinos in Deadwood, as well as tribal casinos, are authorized to operate on-site sportsbooks. Mobile wagering is limited to commercial casinos.

2022 Optimism

There are many state lawmakers who feel Minnesota needs to legalize sports betting to curb offshore activity that’s already going on. They also want to keep gaming money from flowing to neighboring states where sportsbooks are up and running.

Minnesota state Rep. Pat Garofalo (R-Farmington) told the StarTribune recently that he’s “cautiously optimistic” regarding a sports betting bill achieving bipartisan support in 2022. Garofalo has sponsored sports betting legislation in each of the previous two legislative sessions.

A year ago this month, Garofalo and Sen. Karla Bigham (D-Cottage Grove) introduced a sports betting statute that would have granted all Class III gaming tribes in the state with sports betting privileges. Minnesota is home to 11 federally recognized tribal nations that own and operate 19 casinos.

Garofalo and Bigham’s 2021 sports betting legislation sought to allow the tribes to maintain a monopoly on sports betting for the first year at their land-based casinos. After 12 months, the tribal casinos could debut online sports wagering, but so could horse racetracks that partner with third-party iGaming firms like DraftKings.

The measure came with a proposed tax rate of eight percent on mobile sportsbook revenue and six percent on on-site betting income.

Tribal Opposition

Minnesota’s tribes oppose sports betting legalization unless it is explicitly reserved for their sovereign nations. Unlike most other Class III gaming compacts, which require tribal casinos to share some portion of their gaming earnings with their host state, Minnesota’s tribal arrangements do not come with any revenue-sharing provisions.

However, the tribes do pay the state certain fees to cover Minnesota’s regulatory oversight of their operations. They also pay payroll taxes that amount to around $125 million a year.

Minnesota’s tribal compacts are substantially similar. And a critical piece of the legal language states that the Native Americans maintain exclusivity on casino gambling. The compacts are effective in perpetuity and cannot be reopened or renegotiated unless both sides agree to do so.

Though Minnesota only has tribal casinos, the state has one of the largest charitable gaming markets in the US. In the 2019 fiscal year, the Minnesota Gambling Control Board reported that there were nearly 3,000 charitable gaming premises that generated gross sales that year of $2.3 billion.