After all signs pointed to a genuine compromise between sports betting stakeholders in the North Star State, the process broke down in the legislature and, alas, there will be no sports betting this year in Minnesota but plenty of blame to go around.
The Solution That Wasn’t
There are several moving parts in the sports betting industry in Minnesota including Native American tribes, horse tracks, charities, professional sports teams and national sportsbook operators. All those factions must be placated to some extent to get mobile and retail sports betting passed in the North Star State and it appeared all those interests were satisfied entering this legislative session.
The focal point of the legislation revolved around revenue sharing between the state’s smaller tribes and the two horse racing tracks. To appease both the former and the latter, the revenue-sharing plan would be formulated as the following:
- Funded with 15% of online sports betting tax revenue, a tribal equalization account guaranteed every Minnesota tribe a minimum revenue by supplementing tribes that opted not to participate or partner with a platform provider with a low market share.
- Minnesota tracks also got 15% of online sports betting tax revenue uncapped. For the first $12.5 million annually, Canterbury Park (with greater racing expenses) split 60-40 with Running Aces. Any additional revenue share disbursement would revert to the 72-28 advanced deposit wagering split currently in use. The tracks could put the revenue share toward all racing expenses, not just purses.
Even the state itself got a minor boost when lawmakers upped the tax on sportsbooks adjusted gross revenue from 20% to 22%.
“One of the big issues was always that some of the smaller tribes were not happy that racetracks could potentially make more money than them,” said Running Aces CEO Taro Ito. “I think that has always been a thorn. They were able to resolve that through some creative financing, and I think that was the breakthrough that led to continuing the discussion with the tracks.”
Political Squabbles
Not surprisingly, politics got in the way of a sports betting solution that would have benefited the stakeholders and Minnesota’s tax coffers while bringing mobile sports wagering to the masses. Political divides began to boil over and Republicans refused to work with the Democratic-Farmer-Labor Party (DFL) after partisan divides on other issues caused a domino effect that negatively impacted the sports betting solution that was blessed by virtually all the stakeholders.
“I think sports betting got swallowed up by events way beyond sports betting,” Ito said. “It fell victim to bigger things.”
Republican Rep. Pat Garofalo commented on the rift: “I think we were really close on sports gambling. I 100% believe if Sen. Mitchell had not been arrested for burglary that they would have passed it this year. When the DFL started relying on Sen. Mitchell’s vote to pass things, it was just like a turd in a punch bowl that blew up a lot of things that needed bipartisan support, and sports gambling was one of those things.”
The arrest Representative Garofalo is referring to centers on Senator Nicole Mitchell who was arrested on felony burglary charges in what has been described as family-related strife. Yet, in the end, the session terminated without a vote in the Senate. Nevertheless, the building blocks for an agreement are there the next time around as long as the politicians can keep their petty differences from shutting down sports betting again.
