At its latest hearing, the State and Local Government Finance and Policy Committee voted to amend the House’s sports betting bill, HF 2000. The change allowed a large tax break for charitable gaming operators.
The amendment persuaded some lawmakers to support the bill. However, representatives for Minnesota’s racetracks still believe the legislation doesn’t address their concerns.
Some Republican legislators have pushed for any potential sports betting bill to include more to support the tracks. They believe racetracks should have their own sports betting licenses. Or at least let them partner for one.
But Democrat lawmakers control both houses of the legislature and have aligned with the state’s tribal casino interests. They support tribal exclusivity in the industry.
The committee voted to pass HF 2000 and refer it to the House Taxes Committee.
Minnesota racetracks oppose amendment
Representatives from the state’s two horse racing facilities, Running Aces in Columbus and Canterbury Park in Shakopee were in attendance. They said HF 2000 will have a negative impact on the Minnesota racing industry.
The new amendment calls for an annual contribution of $625,000 to the Racing Commission Economic Development Account. But the reps and at least one Republican committee member felt that was an insufficient concession.
Rep. Jon Koznick raised his concerns to Stephenson:
“I think there needs to be more work done to make sure that we do not imperil and diminish and eliminate a strong (horse racing) industry. Putting the additional competition in other states has actually killed horse racing.”
Tracie Wilson, CFO of Running Aces, vocalized her displeasure to the committee, citing the amendment’s restrictions on racetrack offerings. The amendment said horse racing “shall not include any form that has happened in the past or is considered historical horse racing.”
After Wilson’s testimony, Koznick asked Stephenson why “historical horse racing” was being singled out. Especially when it could help keep tracks economically viable without sports betting.
Stephenson explained that “historical horse racing” machines, which are not currently available at tracks, are very similar to slot machines. He said the language in the amendment simply clarifies the law prohibiting such machines at tracks.
The state’s tribes have opposed “historical horse racing” machines due to their similarity to slots. Rep. Koznick said not allowing them would be “detrimental” to the industry.
Amendment includes $40 million in charitable gaming tax breaks
Charitable gaming concerns entered the sports betting picture after the state’s legislature last year put restrictions on electronic pull tab games, a big part of the revenue from charitable gaming machines found in bars and restaurants in Minnesota. Those restrictions came after lobbying from the tribes, which felt the machines had become too much like the slots that are legally only allowed in their casinos.
HF 2000’s author, Rep. Zack Stephenson, told the committee that, once fully phased in, charitable gaming operators will see $40 million in annual tax relief. Revenue from charitable gaming goes to a variety of causes in the state, including education, homeless organizations and problem gambling programs.
“Under current law, the tax on charitable gaming is high enough that if you look at proceeds after prizes are paid out, the state actually gets the most money out of charitable gaming, followed by the game developers, followed by the charities,” Stephenson said. “When this (tax break) is fully implemented, I think you’ll see that flip, (with) the charitable mission being the No. 1 beneficiary of charitable gaming.”
Dr. Kristy Janigo, the legislative chair of the American Legion Department of Minnesota, told the committee that the tax cuts will have a big impact.
“Our state taxes have been higher than the amount of money we’ve been able to deploy to help our communities,” she said, “and we believe what you’re doing with this bill will reverse that to the benefit of all Minnesotans.”
Tribes have concerns but support moving bill forward
Andy Platto, executive director of the Minnesota Indian Gaming Association, which represents the interests of nine tribes, also appeared before the committee.
Platto said that MIGA tribes supported the bill, but they had some unspecified concerns with certain elements. It’s possible the MIGA tribes have an issue with the part of the amendment that, in addition to sports betting, would legalize and regulate daily fantasy sports operations in Minnesota. Unlike sports betting licenses, DFS operational licensing would not run through the tribes.
Platto said the tribes fully support the tax relief for charitable gaming included in the amendment.
