A Minnesota House committee passed a bill that would legalize sports betting. Additionally, the committee added an amendment that would explicitly legalize and regulate daily fantasy sports.
At its March 21 hearing, the State and Local Government Finance and Policy Committee voted to pass HF 2000. Now, the legislation heads to the House Taxes Committee for further consideration.
Rep. Zack Stephenson is the bill’s sponsor and author. He appeared before the committee, which also includes a provision for tax relief for charitable gaming operations. Then, the committee heard public testimony from tribal gaming and DFS representatives supporting the bill.
Bill would regulate, tax DFS industry in the state
Daily fantasy sports is a “gray market” activity in Minnesota. In other words, no law states it’s either legal or illegal. Major operators like PrizePicks and DraftKings currently offer their DFS products Minnesota.
Adding DFS to the sports betting bill allows the state to create a regulatory framework for the DFS industry. It also adds an additional source of tax revenue. The amendment taxes operators at 10% of net revenues.
Stephenson said that he thought the amendment was necessary after seeing how other states cracked down on DFS operators. Those states saw the offerings from some DFS operators as too similar to sports betting. For example, Florida sent cease-and-desist letters to Betr, PrizePicks and Underdog Fantasy, claiming the operators were offering “illegal bets or wagers.”
“In discussing this with stakeholders,” Stephenson said, “the thought was it would be better to have an actual regulatory structure around DFS to make clear to the regulators that this is a permissible activity, it’s not unlicensed sports betting.”
DFS licensing would not go through tribal casinos
The sports betting aspect of HF 2000 would give mobile sports betting licenses to tribal casino operators. Unlike those licenses, DFS operators would not be required to partner with a tribal casino to offer their platform in Minnesota.
DFS licenses would cost a $10,000 registration fee and an initial license fee of up to $5,000. The licenses would be good for three years, and the renewal fee would be 1% of the operator’s adjusted gross receipts from the previous three years.
There is no cap on how many DFS operating licenses can be issued.
Fantasy sports contest already popular in Minnesota
The committee heard testimony from Pat Gibbs, a lawyer testifying on behalf of the Coalition for Fantasy Sports. The coalition represents the interests of DFS operators PrizePicks, Betr and Underdog Fantasy.
Gibbs said the coalition supported the amended bill, noting that Minnesota currently has more fantasy sports players per capita than any other state.
“HF 2000 will authorize and regulate sports wagering throughout Minnesota, allowing the state to implement strong consumer protections,” Gibbs said. “The amendment (regulating DFS) will ensure Minnesotans can also continue to safely play the fantasy sports contests that they know and love.”
Senate companion bill awaits next hearing
A companion sports betting bill in the Minnesota Senate passed through committee last week with an amendment increasing the tax rate from 10% to 20%. SF 1949 also includes a prohibition on in-game betting. The House bill has maintained the 10% tax rate and doesn’t ban in-game betting.
The Senate bill is currently awaiting a hearing by the Senate Finance Committee.
Sen. John Marty chairs the committee, and his public safety concerns contributed to the in-game betting ban.
Marty recently wrote an op-ed for the Star Tribune expressing his ongoing issues with legal sports betting. On the other hand, he said he was open to working on a bill that “addresses the devastating economic, social and mental health impacts, including suicide risks, on many bettors and their families, as well as the impact on the integrity of sports and the risks to athletes.”
