Sports-betting bill makes it through the Ways & Means Committee

By Tim Engstrom
State Rep. Zack Stephenson answers questions from state Rep. Marion Rarick on Friday, May 10, before the House Ways & Means Committee.

ST. PAUL — The sports-betting bill containing tax cuts for charitable gambling remains alive and well at the state Legislature after surviving the House Ways & Means Committee on Friday, May 10.

The committee approved the measure on a voice vote.

State Rep. Zack Stephenson is the bill’s chief author and has shepherded it through the legislative process. It presently is labeled House File 5274.

He described how, in the first year, tax cuts for charitable gambling add up to $7 million, in the second year $24 million and in the third $40 million. However, the tax cuts only kick in if sports betting revenue is high enough.

He faced questions about that contingency. Projections show state revenue from taxing sports betting will be double or even more than double the amount to be reduced from charitable gambling, he replied. This, he said, is based on estimates of the growth of sports gambling in other states.

He said the notion of the state failing to reach the expected revenue to trigger charitable gambling tax cuts is doubtful.

“I think it is very unlikely. In fact, it’s extremely unlikely,” Stephenson said.

An opponent said giving the green light to sports betting will create a black market.

Just the opposite is true, Stephenson said. “There already exists a black market for sports betting in Minnesota. This will turn it from a black market to a legitimate one,” he said.

There was debate over whether a fiscal note reflected the true cost of criminal enforcement; however, others noted that regulating a previously criminal activity naturally would reduce crime, not increase it. Stephenson also noted that registration fees would more than pay for start-up costs for regulating the industry.

The biggest difference on the measure remains its treatment of horse racing tracks. The bill now provides $650,000 to the Minnesota Racing Commission for an economic development fund, from which its proceeds can increase purses. However, Rep. Brian Pfarr said it isn’t enough.

There remains debate about the tribal casino’s long-held exclusivity to slot machines. Tribes say horse-racing machines at tracks seem too similar. Yet others are concerned, citing last year’s fight over e-pulltabs, about tribes wanting to use their clout to reduce competition for the overall entertainment dollar.

The veterans community — Legion, VFW, Amvets — along with other charities have no stance on the debate regarding the tribes and tracks. They are merely after long-promised tax cuts.

State Rep. Pat Garofalo and Stephenson, near the end of the hearing, talked about how compromise on the bill seems close at hand to make the language bipartisan and bicameral.

Click here to contact your lawmaker in support of the measure. Cuts to taxes on charitable gambling will help veterans and youth programs.