Senator Matt Klein, a longtime legal sports betting proponent, filed SB 757, which would allow for statewide mobile sports betting with platforms tied to tribal casinos. The bill also outlines regulations for daily fantasy and would allow for betting on e-sports.
Minnesota lawmakers have been trying for at least four years to legalise sports betting. But finding the sweet spot with the state’s 11 tribes — who have exclusivity for gaming — and local horse tracks has proved elusive.
Klein’s bill lays out a detailed framework that would allow for 11 wagering operator licences for the state’s tribes. The tribes, in turn, could contract with management service providers for digital wagering platforms. According to the text of the bill, any bets placed outside of Indian Country would be taxed at 22%. That rate is higher than the national average and above what wagering operators consider comfortable. It’s also labelled as a “tax,” which could create an issue with the tribes.
Tribal sovereignty may be in question
The framework of digital sports betting and tribes is inconsistent across the US. In Arizona, Connecticut and Michigan, tribes agreed to be regulated and taxed by the state for digital betting. But in Florida the Seminole Tribe, which has a monopoly on Class III gambling, pays a revenue share to the state, not a tax.
How Minnesota’s tribes will want to handle off-reservation betting remains to be seen. But they have previously made clear that they want to preserve their exclusivity and sovereignty. SB 757 gives the tribes a monopoly, but does encroach on tribal sovereignty.
The bill does address the racetracks’ desire to benefit from sports betting. According to the bill, 15% of tax revenue would be earmarked for a racing economic development fund. Whether or not the state’s tracks view this as a reasonable solution is not yet known.
What’s inside
Here are some other key items in the bill:
Betting on “a contract for insurance on the life or death” of an athlete, “private social bets,” “sports-themed tipboards” and peer-to-peer wagering on a betting exchange are banned;
The regulator would have the right to limit the frequency of betting ads;
Advertising directly to those under 21, on an elementary school or college campus is banned;
The regulator would have the right to limit the amount and number of bets beyond a stated maximum;
Operators must offer responsible gambling tools, including bet- and time-limiting tools;
The regulator will have 90 days to act on an application once it is filed;
The operator’s — read: tribe’s — logo must be readily visible on a wagering platform;
Deposits cannot not be accessed until a minimum of three hours after they are made;
A baseline study about the state of Minnesota gambling is due ahead of launch. A follow-up would be required three years later.
In terms of licencing, tribes would be able to apply for operator licences at a cost of $2,125 per year. Platform providers would have to pay a $16,500 application fee, a $250,000 (£201,000/€241,000) initial licencing fee and an $83,000 annual renewal fee. Operator licences will be issued for a 20-year period, while platform provider licences must be renewed annually.
The legislation also appears to call for a universal launch date, though no specific date is specified.
Interesting language
The bill does include some unusual language in relation to tribes.
Last summer, the Seminoles won the right to determine that bets are considered “placed where received.” This means that any bet placed in Florida that flows through a tribal server is considered to have been placed in Indian Country. Thus, it cannot be regulated or taxed by the state.
The decision, along with some key changes to the Bureau of Indian Affairs guidelines for interpreting the Indian Gaming Regulatory Act, is considered a blueprint for tribes in other US states. But Klein’s legislation for Minnesota contains this section:
Any wager placed on Indian lands is not subject to state taxation. For purposes of this chapter, a wager is placed at the physical location of the individual placing the wager.
In another section, the text reads:
The incidental routing of a mobile sports wager shall not determine the location or locations of in which the wager is initiated, received or otherwise made.
This language is at odds with the language in the Seminole compact with the state of Florida. It could be interpreted to mean that bets placed off tribal lands are subject to taxation.
In addition, SB 757 includes Section 299L.755, titled “Sports Betting Equalisation.” In this section, Klein spells out that any tribe that does not partner with a “mobile sports betting platform provider that constitutes more than 10% of the Minnesota market share of sports betting platform providers as of 31 December of the prior calendar year” is eligible for a revenue payout from the equalisation account.
The language seems to resemble that of the California’s Revenue Sharing Trust Fund, in which non-gaming tribes get an annual payout.
Second Minnesota bill coming?
Ahead of Klein’s filing, senator Jeremy Miller also a promised a bill. His had not been filed as of Friday (31 January) morning.
Per a press release on the Minnesota Senate Republican Caucus website, Miller said, “Minnesota continues to miss out on what is now a $150 billion industry. We were on the brink of success last year; I strongly believe 2025 could be the year we get this across the finish line.”
The draft would allow for legal digital sports betting tethered to the 11 tribal casinos at a 20% tax rate. Miller addresses two key issues that have come up previously by allocating 50% of tax revenue for “charitable gaming tax relief” and 20% “to enhance horse racing in the state.” Horse racetracks have previously argued that they should get a piece of the wagering pie. Miller’s proposal doesn’t give the tracks access to wagering, but would funnel dollars toward it.
Like Klein’s bill, Miller’s would call for a tax on gambling revenue, and tribes will likely weigh in on that. Miller said the proposal combines previous versions of legal wagering bills and new ideas “brought forward from constituents and stakeholders. The goal of this proposal is to bring folks together to work toward a bipartisan solution to legalize sports betting in Minnesota.”
Minnesota’s legislative session opened 14 January.
