A bill that would legalize Minnesota sports betting has made its way into the state House, after clearing a committee hearing 14-7 on Thursday.
Minnesota HF 778, which was introduced by Democratic-Farmer-Labor Party Rep. Zack Stephenson, would grant retail and mobile sports betting licenses to each of the state’s 11 Native American tribes.
The bill includes a 10% tax rate on all sports betting transactions, with proceeds going towards the state’s general fund and to treat problem gambling in the state. The remainder would be used to support youth sports programs in communities with high rates of juvenile crime.
The state’s market would launch July 1, 2023, with the House’s tax research division projecting $5.3 million in tax revenue during the 2024 fiscal year and $12.2 million going into the state’s coffers in 2025.
Why Minnesota Chose Such a Low Sports Betting Tax Rate
During Thursday’s House Ways and Means Committee hearing, Stephenson pointedly addressed the sports betting tax rate, saying the state chose a lower rate to sway those using the “black market” to wager above board going forward.
“We have a huge black market in Minnesota — there’s $2 billion in Minnesota every year spent on this and none of that money goes to problem gaming,” Stephenson said. “It doesn’t mean that people don’t have a problem gaming. They do under our current system. So we need to be honest that this is a real problem that needs to be addressed.”
Stephenson’s comments came after Republican Rep. Tim Miller questioned why — if Minnesota wasn’t going to enforce a tax rate on par with neighboring states — they would impose taxes on sports betting transactions at all.
Miller’s amendment to strip the betting tax failed, however, leading to a straight floor vote on the house bill as is, which passed by a 2-to-1 margin.
As a result, Minnesota’s sports betting bill will make its first appearance in front of a full chamber of the state’s legislature, which bolsters its chances of passage before the body wraps up its session May 23.
History of Minnesota Betting Efforts
After a U.S. Supreme Court decision allowed for state-by-state sport betting in 2018, it took around two years for Minnesota legislators to get a bill into the 2020 session. At that time, Minnesota tribes were not in favor of legalizing sports betting and the bill stalled. Then COVID-19 hit, and everything stalled. More bills were introduced in 2021 but none of them got anywhere.
On March 7, Stephenson announced HB 778. The next day Stephenson’s bill sailed through the House Commerce Committee, 14-4 in favor. The following week it squeaked through the Finance and Elections Committee 7-5, with a change raising the minimum age of would-be wagerers from 18 to 21. On March 24, the House Bill easily passed the Judiciary Finance and Civil Law Committee.
