Legalized sports betting advances at Capitol as tribes object

ST. PAUL, Minn. (FOX 9) - A bill allowing Minnesotans to legally bet on sporting events passed a Senate committee Thursday despite objections from Native American tribes that say it will eventually doom their casinos.

The Senate Tax committee approved it, 5-2, with three members absent or deciding not to cast a vote. The measure, sponsored by state Sen. Roger Chamberlain, R-Lino Lakes, allows sports bets placed at tribal-owned casinos, two racetracks in the Metro, and on mobile phone apps operated by the casinos or racetracks.

“Legalize it, regulate it, make it safe and accessible to people so they can invest in their opinions and have some fun,” Chamberlain said during Thursday’s committee hearing. He predicted that sports betting would become at least a $2 billion industry in Minnesota.

The Minnesota Indian Gaming Association and its 11-member tribes are opposed to the bill, and their stance threatens to derail its movement through the Legislature.

Placing wagers on mobile phones is the first step toward internet gambling that would put tribal casinos out of business, said John McCarthy, the group’s executive director.

“The real danger, the real fear, is that is going to lead fairly soon to wide-open internet gambling, where you can play anything you want on your phone,” McCarthy said. “And that keeps a lot of people home.”

When FOX 9 asked if the tribes were open to negotiations over the legislation, McCarthy said, “I believe we are opposed to this, period.”

Chamberlain told reporters after the hearing that he saw sports betting as a “business enhancer” for the tribal-owned casinos instead of a path to financial ruin.

“We are hopeful they will come on board,” Chamberlain said. “Their business model will not last forever. Young people do not go to casinos. I go to them occasionally with my spouse and others, and I’m quite often the youngest one there – and I’m in my mid-50s.”

The Senate bill would impose a 6.75 percent tax on net revenue from sports betting, which is the total wagers minus any prize money paid. It diverts 0.5 percent of the tax revenue into a state program to treat gambling addictions.

McCarthy and two senators raised concerns that the tax would be illegal under a federal law that requires tribal gaming revenue to be used only for the benefit of the tribe. However, other states have agreed with tribes on a revenue sharing structure in which the tribe makes payments to the state in exchange for services, such as fire protection, McCarthy said.

Chamberlain said the tribes had not yet agreed to negotiate with him over a revenue sharing structure, and said he included the 6.75 percent tax in his bill because of the two racetracks.

The Senate bill would allow wagering at Canterbury Park in Shakopee and Running Aces in Columbus. A House bill filed earlier this session, which has not yet gotten a public hearing, does not allow bets to be placed at racetracks.

The Senate bill requires that bets made through mobile phone apps be placed with a licensed sports pool, which would be one of the racetracks or tribal-owned casinos. To comply with federal law, the apps would use “geo-fencing,” a setup that only allows bets to be placed from inside Minnesota’s borders.

Under the House bill, mobile bets would not be allowed more than 20 feet from a tribal-owned casino.

Two other groups opposed to legalized sports betting, Citizens Against Gambling Expansion and the Joint Religious Legislative Coalition, testified Thursday about the social costs of gambling addictions.

“We see this bill as a bad deal financially for the state of Minnesota and its citizens,” said Jake Grassel, executive director of Citizens Against Gambling Expansion.

Gov. Tim Walz has said he’s open to legalized sports betting. But Senate Majority Leader Paul Gazelka said Thursday that he opposes it.

The bill heads next to the Senate State Government committee.