Another week, another stop in a committee for a Minnesota sports betting bill.
HF 778, introduced by Rep. Zack Stephenson, passed through the House Taxes Committee on Thursday afternoon. The bill has now passed through four House committees, and it’s headed to another.
The bill, which aims to legalize retail and mobile sports betting, heads to the House Ways and Means Committee. If the bill passes through that committee, it can be discussed on the House floor.
Under its current provisions, the bill includes a tax rate of 10% of net revenue. Of the state’s tax share, 40% would be distributed to problem and responsible gambling initiatives. The state’s 11 tribes would control sports wagering in the state, as casinos owned by the tribes would be permitted to offer mobile betting across Minnesota.
Reducing the black market
Stephenson stressed to the Taxes Committee members that rather than bringing tremendous tax revenue to the state, the bill’s goal is to reduce the sports betting black market in Minnesota. He shared estimates that about $2 billion is wagered illegally in the state each year, and Stephenson believes a regulated market would be better for residents.
“What this bill is about is creating a legal marketplace that will displace that black market, and in doing so, provide consumer protection, ensure the integrity of the game, and limit money laundering and other illegal activity,” Stephenson said.
The representative made a point that all of Minnesota’s neighboring states have at least some form of legal sports betting, whether retail or mobile or both. Stephenson stressed a need to adopt sports betting legislation correctly, which is why he said he had discussions with the state’s 11 tribes, as well as the University of Minnesota and the state’s professional sports teams, when drafting the bill. Wagering on collegiate sporting events, including those involving Minnesota schools, would be allowed.
“This is an idea whose time has come,” Stephenson said of legalization.
Some disagreement from stakeholders
There was some debate from committee members regarding the tax rate in relation to its impact on charitable gaming organizations. Some House members have wondered about the lack of access for charitable gaming organizations in the bill.
Charitable gaming organizations in Minnesota are taxed by the state at a 30% rate, three times higher than the 10% tax rate proposed on sports betting. Sam Krueger, executive director of the Electronic Gaming Group, spoke briefly during Thursday’s committee meeting.
“This legislation will create a tax disparity between our gambling and other gambling that would be authorized in the state,” Krueger said. “This unfairness is going to impact every single one of your communities and the charities that serve them.”
Krueger shared that his group is fine with tribal casinos not being taxed on tribal land, but he had an issue with statewide mobile wagering offered through those casinos not being taxed similarly to charitable gaming organizations.
Despite similar questions and concerns from committee members, the bill passed by a vote of 13-5. Some members of the committee are hopeful the potential disparity between taxes on charitable gaming and sports betting could still be addressed in the bill moving forward.