Minnesota lawmakers should take their time on sports betting

There was a groan at the dinner table on Christmas when I told my 20-something nephews what I planned to say in this column:

Minnesota legislators should take a beat and wait at least another year before legalizing sports betting.

I initially thought I'd be for it, I told them. But it doesn't make life better for anyone, so there should be no rush. And, after listening to people in the industry, it was clear that none of the businesses standing to profit in a big way from sports betting are in Minnesota.

My nephews didn't buy it. Their lives will be more fun, they said. I should be on the side of consumers, they added.

Lots of Minnesotans want to use sports betting apps on their phones, as can be done in all the states and provinces that surround us. In a KSTP-TV poll last spring, 57% of respondents said Minnesota should allow it. Since a Supreme Court ruling in 2018 gave states authority over sports betting, more than 30 states have legalized some form of it.

Minnesota's 11 tribes have had exclusive rights to operate casinos in the state since 1991. So why, I wondered, did they suddenly reverse their initial resistance to sports betting last year?

Representatives for the tribes say they know Minnesotans want sports betting. While they suspect they'll lose revenue as people shift to gambling on sports instead of the video slots and table games at their casinos, they said there's a feeling of inevitability that brought them into the legislative debate.

At both the state's casinos and two racetracks, the upside from sports betting is likely to be small. Unless they develop their own apps, they'll have to partner with the big platform providers like DraftKings and FanDuel, who will give them a tiny portion — likely a single-digit percentage — of the overall revenue.

There's little data about the effect that mobile sports betting has had on existing casinos and racetracks, or on people, in other states. Taro Ito, chief executive at Running Aces, the racetrack and resort in Columbus, thinks it will be "highly negative" for its business.

"People only have a certain amount of discretionary dollars for entertainment," Ito said. He added that, to him, the question is, "Do we lose big or really big?"

Some Minnesotans already bet on sports using apps that get around territorial restrictions, according to a spokesman for the Sports Betting Alliance, the trade group of the platform companies. A main reason lawmakers should legalize sports betting, he said, is to let Minnesota companies "compete with illegal offshore sportsbooks."

But many social and religious organizations, recovery centers and academic researchers warn that making gambling so pervasive is exploitative and pernicious.

That's all true. And yet, I lean to making it legal, hoping that people will recognize the risks that always available gambling presents. But I'd first like to see more data about the effects elsewhere. I don't see any reason for lawmakers to act quickly.

The tribes last year supported a sports-betting bill crafted by Rep. Zack Stephenson, DFL-Coon Rapids, that only licensed them. They opposed a Senate measure that would have also licensed the two racetracks.

Those bills didn't go anywhere in the election-year session. Stephenson is ready to reintroduce his measure. Sen. Karin Housley, the No. 2 Republican, is likely to lead a version there. It's an issue that doesn't cut cleanly across party lines, with opponents and supporters in both parties.

Stephenson proposes that the taxes Minnesota collects from sports betting, after paying for regulatory oversight, be used to combat gambling addiction and to fund youth sports, particularly in high crime areas. (He's a Hennepin County prosecutor when the Legislature is not in session and knows a lot about juvenile crime.)

But, he noted, the amount bet on sports is far greater than the revenue it creates for businesses and taxes it creates for government.

"It won't be in all likelihood a major revenue generator for anybody," Stephenson said.

He still wants to confine sports betting licenses to the casinos. And that upsets Ito at Running Aces.

"What we need is parity," he said.

Executives at Canterbury Park, the racetrack in Shakopee, will lay out their views as soon as Wednesday. Canterbury Park's 10-year financial relationship with the Shakopee Mdewakanton Sioux Community appears on the verge of ending. That could bring a shakeup involving more than sports betting to the Minnesota gambling scene.

Stephenson said he's not in a hurry and wants to make sure any expansion of Minnesota gambling is "done well and correctly." But he said, "A lot of work has already been done, which makes it easier even while we're tackling everything else, to have this sports betting bill move forward."

Evan Ramstad is the new business columnist for the Star Tribune. He has been a deputy business editor at the paper since 2013. He previously worked for the Wall Street Journal, St. Paul Pioneer Press and Associated Press.