© Scott Takushi/Pioneer Press/TNS Customers watch simulcast live racing at Running Aces Harness Park in Columbus, Minn.
Senate Democrats are betting that cutting horseracing tracks in on some of the revenue from sports wagering will bring the political support needed to approve a broad expansion of gambling in Minnesota.
Lawmakers have debated legalized sports betting for years, but it’s been a bit of a sleeper issue during this year’s legislative session with Democrats in control of state government with a long list of priorities.
A bill that would legalize sports gambling was modified Wednesday by the Senate state government committee to funnel as much as 30 percent of the tax revenue from the new wagering into an economic development fund to aid the horseracing industry.
“It recognizes that a new form of gambling, like mobile sports betting, may have a negative impact on horse breading and racing,” Sen. Matt Klein, DFL-Mendota Heights, who is the primary sponsor of the bill in the Senate, said about the recent changes.
Klein said he hoped earmarking gambling tax revenue to help the horseracing tracks would ease concerns lawmakers have on how legalizing sports betting would impact existing gambling businesses. Democrats have a one-seat majority in the Senate so they’ll need every vote unless they can win over some Republicans.
The bill still gives Minnesota’s American Indian tribes exclusive control of sports wagering, including online, although they would likely partner with one of the big smartphone betting applications.
The Minnesota push for legalized sports betting began after the U.S. Supreme Court struck down state prohibitions on sports wagering in 2018. About half the states now allow some type of sports betting, including all of Minnesota’s neighbors.
Lawmakers have struggled to advance a sports betting bill under divided government because Republicans wanted horse tracks and sports teams to see some of the action. Democrats prefer the state’s 11 American Indian tribes have sole oversight of sports wagering.
The horseracing economic development fund proposed by Klein could see as much as $20 million in state revenues initially from taxes on sports betting. After that a maximum of $3 million a year would be set aside for the horseracing industry.
Advocates for the horse tracks acknowledged the attempt to ease concerns about the impact on their industry, but they said the money is not enough to make up for what is expected to be a drop in revenue if sports wagering becomes legal.
Track operators are still pushing to be able to expand the type of betting they can offer if the Legislature decides to expand gambling into sports.
“If this bill is passed, all constituents, the racetracks and the Native American casinos, need to be treated fairly,” said Tracie Wilson, the chief financial officer for Running Aces, which offers horserace betting and table games at a hotel and casino in Columbus, just north of the Twin Cities metro.
The proposals working their way through Legislature include a 10 percent tax on sports bets. But lawmakers don’t see sports betting as a big revenue generator, other money from the tax will be used to address problem gamblers and promote youth sports.
Not everyone is enthusiastic about more gambling in the state. Jake Grassel, of Citizens against Gambling Expansion, said the minor changes in the Legislation discussed in the Senate don’t address the real society risks of increased betting.
“This bill is not ready,” Grassel said, noting higher rates of problem gambling among those who bet online. “It is not needed and the cost to our society far outweigh any benefits.”
Bills to legalize sports gambling still have to be vetted by House and Senate committees before they can be considered by both chambers of the Legislature. Time is short with the session ending May 22 and lawmakers working on a long list of other priorities including a new two-year budget.
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