Minnesota Senate Tax Committee doubles wagering tax, moves bill foward

The bill, SF 1949, has been through six Senate committees, and is now on its way to Senate Finance. Should it pass out of the Senate, the bill would follow a similar process in the House.

Minnesota’s legislature is set to adjourn on 20 May, and there is no crossover deadline. Lawmakers have travelled this path before, passing similar legislation in the House in previous sessions, only to have it stall in the Senate. A key issue is whether to give the state’s 11 tribes exclusivity for sports betting or include horse tracks. The current Senate version of the bill does include the tracks, which the Minnesota Indian Gaming Association opposes. That issue was not raised in the Taxes Committee, but is likely to come again in the future.

Governor Tim Walz has said previously that he will approve a legal sports betting bill.

Senator Aric Putnam offered the amendment that would raise the tax. The amendment also allows for operators to write off 100% of promotional play for the first two years, and then steps down the percentage of the writeoff by 25% for four years until it reaches 0%.

How funds from sports betting tax revenue would be spent is also addressed in the amendment, including earmarking 10% to be used for problem and responsible gambling initiatives and 5% of revenue to the state’s two racetracks. According to the text of the bill, 20% of tax revenue would go to tax relief for charitable foundations, 15% would go to Minnesota’s tourism commission to draw sports and entertainment to the state, 5% would go to the Minnesota High School League, and 45% would go to the general fund.

“We felt that the existing tax rate of 10% was insufficient,” bill sponsor Senator Matt Klein told the committee. “So we doubled that.”

Three other amendments failed

That amendment, A-104, was one of four proposed and the only one that passed. Senator Scott Dibble proposed amendments that would have changed how funds will be distributed and cut funding for the horse tracks, eliminated promotional writeoffs, and created a bid process for licences that included a minimum 40% tax rate.

With the social engineering, financial & gun crime idiocy proposed by MN legislature, sports betting is the least of the problems. Mn lottery already does a fine job enticing gamblers. @StarTribune @GinnyKlevorn
Sports betting: A risky bet for Minnesota. https://t.co/oYLd4wCsmX

— Polarice1984 (@polarice1984) March 14, 2024

Senator Steve Drazkowski was vocal about his concerns that increasing the tax rate on sports betting would only further burden consumers.

“This is taxpayers, the public paying for promotional activities for the industry to establish itself on this very addictive behaviour,” Drazkowski said. “No matter how you try to disguise it or hide it, the people who engage in this activity are paying the taxes. If the tax isn’t there, the fees would be lower.”

The committee passed the bill by voice vote.

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