The odds on Minnesota adopting sports betting just got a lot better

For his first nine months as chair of the Minnesota House Commerce Committee, Rep. Zack Stephenson wouldn’t even hold hearings on bills to change state liquor laws or add the state to the growing list of those with legal sports betting. He was too busy, he said, drafting his chunk of the two-year state budget and moving a bill to legalize, regulate and tax recreational marijuana.

But now, over two weeks’ time, the Coon Rapids DFLer has heard more than two-dozen bills to liberalize liquor regulation and on Tuesday, he announced that he would be the lead sponsor of a sports betting bill that, if adopted, would make Minnesota the 33rd state to legalize betting on games since a 2018 U.S. Supreme Court ruling invalidated a federal law banning it from all but a few states.

“Minnesotans should be able to engage in legal sports betting right here in Minnesota,” Stephenson said. 

What that legislation will look like isn’t yet known; Stephenson has no bill drafted and said he will hold hearings and talk to interested parties about language before moving forward.

Of those interested parties, perhaps the most influential are the Native tribes that own and operate casinos in Minnesota; Gov. Tim Walz has said he would sign a sports betting bill only if it has tribal agreement. (Thursday, Walz said he was “miffed” that gambling was a topic while frontline worker payments and drought relief remain unresolved.) 

So far, the state’s tribes have not been interested in investing in a form of gambling that has not proven to be especially lucrative. But there are signs they might be softening. In January, John McCarthy, then the executive director of the Minnesota Indian Gaming Association (MIGA), said its members “remain opposed to any and all expansion of off-reservation gambling.”

But Thursday, the new director, Andy Platto, said that MIGA’s tribal governments “have been examining the various ways sports betting has been implemented across the country and its impacts on tribal communities. As gaming experts, tribes stand ready to share this expertise with lawmakers considering the future of sports betting in Minnesota.”

Stephenson said he has spoken to tribal representatives. “I think it is safe to say that I wouldn’t be standing before you today if I didn’t think there was a way to get a policy together that works for a broad segment of Minnesota.”

While he has no bill yet, Stephenson did say he thinks the first legislation would likely take relatively small steps, such as allowing sports betting only within casinos, with no internet or mobile betting. But he rejected the assertion that without some form of mobile betting the state would not move enough bettors from the gray and black markets to legalized sports betting.

Not a partisan issue in Minnesota

Gambling in general — and sports betting in particular — is not particularly partisan in the Minnesota Legislature. While there are some members who oppose expanding gambling and the harm it does to problem gamblers, others think states that signed compacts with tribes under the federal Indian Gaming Regulatory Act should not compete with those tribes.

In 2018, Rep. Pat Garofalo, R-Farmington, offered a bill that would allow on-site sports betting only in tribal casinos and block mobile betting. While he favored a broader bill, he said it was the only path to legalization given the political realities of the state.

But Sen. Karla Bigham, DFL-Cottage Grove, offered a bill last session that included mobile betting but only at tribal casinos. Even race tracks that could offer sports gambling on site could not offer mobile betting. Garofalo sponsored the House version of that bill.

“I’m going to continue to push for mobile because I think that that’s the best way to make this the most successful,” Bigham said.

It’s not that sports betting bills don’t pass in Minnesota, it’s that they don’t even get hearings. The last such hearing came in 2019, when the bill’s sponsor, Sen. Roger Chamberlain, R-Lino Lake, was the chair of the Senate Taxes Committee. 

That’s why Stephenson’s sponsorship could make a big difference, Bigham said. 

“I am pleased that Chair Stephenson is carrying the ball, if you will,” she said. “It is a big signal that the chair of the committee that has jurisdiction over gambling and gaming is carrying it. It’s a significant statement.”

In the Senate, the bills would likely start in the State Government Committee, which is chaired by Sen. Mary Kiffmeyer, R-Big Lake, who has not been supportive in the past. She did not hold a hearing on Bigham’s bill. But there is a change in leadership in the Senate that could make a difference. Sen. Jeremy Miller, a Winona Republican who is a cosponsor of the Bigham bill, is now the majority leader of the Senate.

Chamberlain, now chair of the Senate Education Committee, said he would introduce a sports betting  bill for the upcoming session as well. “You work hard for your money, and if you want to place a little money in support of your favorite team, you shouldn’t have to drive to Iowa or use an international gambling app to do it,” he said. “Sports wagering is good entertainment. It is a business and it will create jobs. I hope to earn bipartisan support as we work to open these betting markets in Minnesota.”

Booze reforms also on the agenda

Stephenson said Thursday that he will also offer a “substantial” alcohol regulation bill that will focus on providing more sales opportunities for small brewers and distillers. They have been seeking more chances to sell their products on-site, including the ability to sell regular bottles and cans, which is now prohibited. Such changes have been opposed by liquor store owners and by the Teamsters Union, which has contracts with beer and wine wholesalers.

Under the three-tier regulatory framework that was imposed after alcohol prohibition ended in the 1930s, Minnesota’s alcohol business was divided between producers, distributors and retail sellers. That was meant to keep any sector from becoming too powerful and monopolizing the business — something that was rampant before prohibition.

So letting small brewers and distributors manufacture, sell and even distribute their beer and distilled spirits required a change in state law. While some flexibility has been passed, the traditional liquor interests have resisted additional liberalization.

“Those are the places that are in all of our backyards and our districts,” he said. “That’s where people like to go to. Proposals that help them as opposed to the bigger outfits are probably our top priorities.”

After ignoring liquor and gambling bills for months, has Stephenson suddenly become the Legislature’s Mr. Vegas?

“The focus last year was getting a budget done and dealing with COVID,” he said. 

Other bills on consumer protection and energy, he said, “took up all of our bandwidth. But now we have the opportunity to take up some of the other issues we’ve heard about from the people  of Minnesota.”