A behind-the-scenes effort is underway at the Minnesota Legislature to legalize sports betting in defiance of current federal law.
The U.S. Supreme Court is expected to rule this year on the constitutionality of a federal law that bans sports betting in states other than Nevada. State Rep. Pat Garofalo, R-Farmington, chairman of a jobs and energy committee, said Minnesota should act now to have the legal infrastructure in place in case the court deems the federal ban unconstitutional.
With a legal framework in place, he said, sports betting in Minnesota would be properly regulated and taxed and not left to an overseas gray market.
"If the Supreme Court removes the ban, and if we do nothing, the offshore sports books will flood social media and scoop up bettors who think they are regulated, legal and taxed," Garofalo said Monday.
Minnesota is not alone. More than a dozen states are considering similar legislation, hoping to lure tax dollars and the technology jobs that come from managing sophisticated sports betting operations, especially on mobile devices.
Getting a law passed to legalize sports gambling in Minnesota this year will be a heavy lift given the legislative calendar. The Legislature is set to adjourn May 21. Lawmakers will be focused on other issues such as taxes and school safety when they return from a weeklong break Monday, with just a bit more than six weeks remaining to complete their work.
Although a group of lawmakers, staff and lobbyists has been negotiating details, sports betting legislation has not been formally introduced. The Star Tribune obtained a bill draft that has been circulating.
The stakes are huge, Garofalo said. What the Legislature does now "will decide who gets to take billions in sports wagers and make tens of millions of dollars," he said.
Garofalo wants Minnesota to get its share of the proceeds. Interest groups including tribal casinos, the pro sports leagues and gambling companies have much at stake, and their representatives are engaged in the discussions.
"I won't submit a sports gambling bill the tribal casinos are opposed to," Garofalo said. "Nonnegotiable."
The effort is certain to face resistance from anti-gambling activists concerned with the potential for addiction and underage play.
"We are opposed and will fight this strongly at the Capitol, as we feel it's one of the largest expansions of gambling in state history," said Jake Grassel, a spokesman for Citizens Against Gambling Expansion.
Grassel said what's at play is not betting parlors but endless, rapid-fire wagering on mobile devices used by young adults — with the potential for underage players to get around age restrictions.
"We're worried about this targeting of the next generation. They're the ones most at risk of developing a problem," he said.
Cathie Perrault, executive director of the Northstar Problem Gambling Alliance, said research bears out Grassel's argument: "Starting younger means it's more likely that they lose control of it," she said.
Her group does not support or oppose gambling legislation but would advocate a proper regulatory regime, she said. "There needs to be consumer protection systems that ensure people receive messaging about the potential for gambling problems, how to get help, and making sure underage players aren't going to play."
Professional sports leagues — whose contests would be the object of wagers — have weighed in at legislative hearings around the country in recent months.
The National Basketball Association, in recent testimony to the Missouri Legislature, advocated for legal betting as a way to properly regulate what is currently a black market activity in every state except Nevada, with a value estimated in the billions.
"The time has come for a different approach that gives sports fans a safe and legal way to wager on sporting events while protecting the integrity of the underlying competitions," the NBA said in its testimony, a relatively recent change in position after decades of opposition.
The NBA says any legislation should protect the integrity of the contests; require payment to the sports leagues to compensate for the risks of allowing gambling on their games; allow the leagues to restrict bets if they choose; provide consumer protections including age requirements; and legalize gambling on mobile devices.
An effort to codify into law the legality of fantasy sports leagues such as FanDuel and DraftKings died in the Minnesota Legislature in 2016. Fantasy sports companies say their contests are skill-based; playing is legal but not written into Minnesota statutes, which is what the companies have unsuccessfully sought to remedy.