Rep. Zack Stephenson wasn’t much of a gambler before he decided to become one of the Minnesota Legislature’s experts on sports betting. Other than playing fantasy football, the Coon Rapids DFLer said he hadn’t bet on sports until a recent visit to Iowa.
So he can be forgiven for avoiding sports cliches and gambling terms to describe what he thinks the, ahhh, odds are for Minnesota joining the 26 states and the District of Columbia that have adopted some form of legalized betting on college and professional sports.
“I don’t have a bill yet,” Stephenson, who chairs the House Commerce Committee, said Friday. “But I think we’re getting close. I’m hoping to have something more concrete to talk about in the very near future.”
A year ago, Stephenson said his committee was too busy with the state budget and with the response to the COVID pandemic to take up the issue. At the time, the committee also heard and passed a recreational marijuana bill.
Since then, however, he said he has met with all 11 recognized tribal councils, all of the professional sports teams, the colleges, and companies involved in sports. “There’s been a lot, a lot, a lot of conversations,” Stephenson said.
Minnesota lawmakers of both parties have introduced sports betting bills since the U.S. Supreme Court’s 2018 ruling that a congressional ban on most sports betting was illegal. The 6-3 ruling in Murphy v. NCAA didn’t legalize betting as much as it cleared the way for each state to make its own decision.
According to an analysis by the National Conference of State Legislatures, 20 states and D.C. have sports betting available so far, with six more having legalized it but not yet setting up a system, while three others have negotiated to allow sports betting in tribal casinos.
Minnesota is not among them. The state tends to move more slowly on big changes, but the primary impediment so far has been opposition from the tribes. Gov. Tim Walz and many legislative DFLers have said that because the state has legal compacts with the tribes, it cannot change the scope of legal gambling without tribal agreement.
While that isn’t established law — Minnesota did not give tribes exclusive rights to gambling in exchange for a share of profits — it is a political reality: DFLers are not inclined to ignore the concerns of tribes that fund governmental programs with gambling proceeds. And so far, the tribes are not convinced that their casinos wouldn’t lose more from sports betting than they would gain if it was available to both tribal and non-tribal operators.
“The tribal governments making up MIGA (Minnesota Indian Gaming Association) have been examining the various ways sports betting has been implemented across the country and its impacts on tribal communities,” the Minnesota Indian Gaming Association said in its most current statement on the issue. “As gaming experts, tribes stand ready to share this expertise with lawmakers considering the future of sports betting in Minnesota.”
But the members of MIGA have been meeting with Stephenson and have not publicly opposed any legislation, partly because there isn’t a formal bill but partly because they are being consulted on bill language.
The sports betting industry has geared up to lobby in Minnesota. The Sports Betting Alliance has contracted with five lobbyists, led by Paul Cassidy of the Stinson firm. The Sports Betting Alliance is made up of the largest mobile betting and sports book companies, including FanDuel, Bet MGM and DraftKings.
The same alliance is backing an initiative in California that is being opposed by casino-owing tribes in that state, who claim it tilts the market toward non-tribal gambling. The tribes favor a different initiative. Because the profits from the new gambling would go toward homelessness, the industry-backed committee collecting signatures is called “Californians for Solutions to Homelessness and Mental Health Support.” Each side has already given $100 million to the effort and the measure is still early in the voter-signature-gathering phase. Minnesota has no initiative process.
Stephenson said one of the main issues he has been trying to respond to is mobile betting; using cell phones and apps to place bets either within the jurisdiction of a tribe or a state or across political lines. In November, when he announced he would take the legislative lead on sports betting, Stephenson said he expected the state to “walk before we run” by limiting where bets could be placed to casinos.
But the industry is now dominated by mobile gambling, and the state stands to lose control of the process — and revenue — if it doesn’t allow mobile betting. “As I’ve talked to a lot of people and thought more about it, it’s become clear to me that mobile is pretty essential to this enterprise,” Stephenson said. “It’s where things are headed across the country.”
Most of the states that include mobile betting in their laws have been more successful than those that did not, he said. And he wants the state program to capture as much of the betting as possible, since the reason for a state program is to protect bettors and move gambling from a black market to a legal one.
Stephenson said he has been talking to lawmakers in both the House and Senate and to both DFLers and Republicans.
Some backers of legalized sports betting claim it could produce revenue for the state. However, most of the money bet is returned to gamblers, and states have been cautious about how much they take from wagers so as not to give an advantage to illegal bookies.
A report released Monday by the national research firm Eilers & Krejcik Gaming estimates that revenue via state-sanctioned sports betting reached $4.34 billion in 2021, a 179 percent increase over the previous year. (Revenue is the amount wagered minus the amount paid out to bettors as winnings.)
An analysis by the conference of legislatures shows that the largest state collection of taxes on that revenue have come in New Jersey and Pennsylvania, which brought in $49 million and $39 million, respectively, in 2020. The large majority of that is due to mobile betting. In New Jersey, for example, sports betting at brick and mortar casinos posted revenue of $2.7 million while mobile or internet betting had revenue of $49.4 million.
But compared to other forms of gambling — lotteries and casinos — the take from sports betting by the state is small. The New Jersey lottery produced more than $1 billion in revenue for the state in fiscal year 2021.