Would Minnesota Be Better Off By Mimicking New Mexico Sports Betting?

Recent failed legislation in Minnesota would have allowed the state’s Native American tribes to operate retail sportsbooks and to partner with online operators to offer mobile sports wagering.

One route that hasn’t been publicly considered is allowing sports betting only at in-person retail sportsbooks. A handful of states with tribal and commercial gambling entities currently allow sports betting exclusively at brick-and-mortar locations.

Could that work with Minnesota sports betting?

Compacts allow in-person sports betting in New Mexico

In 2018, New Mexico was one of the first states to legalize sports betting in the US. But it didn’t happen through legislative efforts.

Instead, some of the state’s tribal casinos added in-person-only sports betting through their open-ended gaming compacts with the state.

The compacts allow tribes to conduct “any or all forms of Class III gaming” on tribal lands. While the language in the compacts specifies some casino-style Class III gaming options allowable (from slot machines to table and card games), the phrase “but not limited to” in the compacts opened the door for on-site sports betting.

Federal regulations classify sports betting as Class III gaming.

Minnesota’s tribal gaming compacts also allow for Class III gaming, but the types of games permitted are specified. They include blackjack and video games of chance like slot machines, but not sports betting. Compacts with individual tribes have been amended over the years, but mostly for smaller technical changes related to existing games.

To amend the compacts in Minnesota, both the government and tribes would have to agree to negotiations. An amendment to add an entirely new game like in-person sports betting at tribal casinos would probably be difficult to achieve.

MN racetracks would oppose changes to compacts

The legislative efforts to bring sports betting to Minnesota over the past several years have largely been stymied by disagreements between the state’s gambling stakeholders.

The state’s tribes have continually sought exclusive control over licensing. Any deviation from that has led to major opposition. But Minnesota’s horse racetracks have also proven to have substantial support from lawmakers. The tracks have fought to have some involvement in sports betting, either being allowed to offer on-site retail sportsbooks or receiving a significant funding concession.

The tracks and their legislative supporters would fight any efforts to amend compacts allowing retail sports betting. One Minnesota racetrack, Running Aces, recently filed a federal lawsuit against some tribal casinos for offering card games it claims are not allowed in compacts with the state.

Retail sports betting generates far less revenue than online sportsbooks

If both retail and online sports betting were legal in Minnesota, far less betting activity would occur at retail sportsbooks. The vast majority of sports betting revenue in the US comes via online wagering.

In Ohio, for example, the state’s retail sportsbooks accounted for only 2.4% of the total $936 million in annual sports betting revenue for 2023.

If betting was allowed only at brick-and-mortar sportsbooks in Minnesota, it would generate revenue, but would it be a significant amount? Retail-only sports betting would not bring substantial tax revenue to the state, as in-person sportsbooks on tribal lands could not be taxed.

And a leading argument for legalization in Minnesota is that it would curtail illegal betting with offshore operators. In-person betting would probably do little to combat that problem.

Partisan division would remain on a retail-only sports betting bill

Partisanship has also played a major role in stifling sports betting legislation in Minnesota. The current-majority Democratic-Farmer-Labor (DFL) lawmakers have overwhelmingly supported tribal exclusivity. Republicans, on the other hand, have fought for the racetracks.

If lawmakers were to attempt to pass a bill allowing only in-person sports betting in Minnesota, it would face the same obstacles as previous legislation.

Republicans have a chance to take back the majority in the Minnesota House in the November elections. That could facilitate sports betting proposals that don’t give the tribes exclusivity. A Republican-led House bill might allow retail sportsbooks at tribal casinos, racetracks and at the state’s professional sports arenas.

But DFL opposition would likely make it extremely difficult to pass any sports betting legislation, especially considering the governor is a member of the DFL Party.