Minnesota sports betting bill House File 778 was passed by the Tax Committee on Wednesday, continuing the bill’s long journey toward legalization.

The bill passed with a 13-5 vote. In addition to the Tax Committee, HF 778 was also approved by the House Judiciary, Finance and Civil Law Committee and the Commerce, Finance and Public Policy and State Government Finance Committees. The bill now heads to the Ways and Means Committee.

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“We should be clear from the outset that sports betting is already happening here in Minnesota,” bill sponsor Rep. Zack Stephenson said during the hearing. “We have a very robust black market, estimates in excess of $2 billion … What this bill is about is creating a legal marketplace that will displace the black market and in doing so will provide consumer protecting, ensure the integrity of the game and limit money laundering and other illegal activates.”

Tax Breakdown, Discussion

Like the other hearings, Stephenson started off by giving a brief overview of the bill to the committee. He reiterated how the bill would permit sports betting at retail locations and on mobile devices across the state. Since this was the Tax Committee, Stephenson discussed how Minnesota would receive 10% of the tax revenue from mobile sports betting, while tribal casino sports betting revenue is not taxed.

Stephenson also highlighted how the tax revenue would go towards the regulations and consumer protections to ensure sports betting remains fair. Forty percent of the revenue goes towards treating problem gambling.

“We need to be honest. Most people can gamble without issue, but for a small subset, it is a real problem,” Stephenson said. “We devote more resources than ever before to confronting this problem. In fact, this would be the largest investment, by far, of mobile tax revenue of any state in the country.”

Another 40% would go towards youth sports and other youth programming across the state with an emphasis on areas experiencing juvenile crime.

A similar cast of people testified on behalf of the bill. Patt Gibbs of the Sports Betting Alliance advocated for the legalization of sports betting in Minnesota, while Andy Platto, the Executive Director of the Minnesota Indian Gaming Association reiterated the tribes’ support for the bill.

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Sam Krueger, the Executive Director of Electronic Gaming, was also back to give his thoughts on what he believes is an unfair tax disparity between his organization’s gambling and sports betting in the state.

Rep. Tim Miller voiced his concerns about taxing an activity he sees as a negative to society.

“So, to say that we get new tax revenues if we do this is not exactly a good thing for me,” he said. “The presumption that we can do these things that are a degradation on our society, but we have the taxes to pay to fix those degradations is just kind of a circular argument that I don’t understand.

“This argument that this sweetens the deal by the fact we get more revenue so that we can spend money on things, I just gripe about this because I just wish we would stop saying that everything is OK because the state is going to get more money.”

Stephenson gave a rebuttal by highlighting the state’s tax rate is below what other states are doing. He gave New York as an example, which takes a 50% tax rate compared to Minnesota’s 10% while Minnesota’s licensing fees and taxes are lower than the state’s neighbors.

“You will never hear me say we should legalize this just to get tax revenue,” Stephenson said. “We’re not trying to do this to make money. It’s about getting rid of the black market, extending consumer protections and addressing the real side effects.”

If the bill passes through the Ways and Means Committee, it could go to the House floor and the Senate.

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