BETTING ON THE FUTURE: DISCUSSING PATHS FORWARD FOR MINNESOTA TO LEGALIZE SPORTS BETTING
By Benjamin Albert Halevy, Volume 108 Staff Member
From pull-tab vending machines at bars to tribe-owned casinos sporting slot machines and blackjack tables, Minnesota is no stranger to gambling within its borders. Yet, sports gambling, the fastest growing sector of gaming, remains wholly illegal within the state.[1] Whether it be through direct legislation or through traditional legal relationships with tribal governments, Minnesota needs to find a way to permit sports gambling in its jurisdiction. Otherwise, Minnesota risks falling behind the curve and missing out on substantial revenue.
I. VARIOUS STATES’ APPROACHES TO LEGALIZING SPORTS GAMBLING
Five years have passed since the Supreme Court ruled in Murphy v. NCAA that federal laws prohibiting state legislatures from legalizing sports gambling within their borders exceeded congressional authority.[2] Passed in 1992, the Professional and Amateur Sports Protection Act (“PAPSA”) explicitly prevented state legislatures from permitting sports gambling,[3] while grandfathering in states that had already legalized such practice.[4] Citing the long-standing anti-commandeering doctrine, the Court in Murphy struck down PAPSA, noting that Congress cannot legislate to mandate state legislatures to act.[5] By striking down PAPSA, the Court effectively allowed states to decide whether to permit sports gambling within their borders and in what format. The first state to do so was New Jersey, the petitioner in Murphy, who legalized the practice shortly after the Court’s decision.[6] Over the past five years, thirty-eight states and the District of Columbia have legalized some form of sports wagering.[7] Notably, Minnesota is not one of those states.
States vary in their approach to legalizing sports gambling in response to Murphy. One approach followed by state legislatures is the New Jersey model; using direct legislative action to create a legal framework surrounding the issue.[8] Another approach followed by some state legislatures is to incorporate sports gambling into their previously established tribal gaming models. For example, North Dakota has recently entered into compacts with local tribes to allow athletic wagering within their reservation borders.[9]
II. LEGISLATIVE EFFORTS TO LEGALIZE SPORTS GAMBLING IN MINNESOTA
Currently, Minnesota only permits a few, very specific types of gambling within its jurisdiction.[10] Minnesota shares sovereignty with a number of Native American tribes, which are permitted to operate more expansive gambling operations than are expressly permitted by Minnesota law.[11] Nevertheless, tribal gaming in Minnesota remains under the purview of federal regulation, and in some instances, requires tribes to enter into compacts with the Minnesota state government.[12] To this end, tribes in Minnesota have entered into compacts with the state government to offer otherwise-prohibited games like blackjack and slot machines in their casinos.[13]
Recently, Minnesota legislators authored a bill appearing to combine both the direct legislative and tribal compact approaches. In short, the legislation would permit sports gambling throughout the state, but it could be offered only by licensed operators.[14] Coincidentally, only tribe-owned gaming operators are eligible to obtain sports wagering licenses.[15] Although this bill is early in the legislative process, its authors clearly attempted to reconcile Minnesota’s statutory gambling restrictions with the state’s history of tribal gaming compacts.
Recent legal developments may be a cause for concern for proponents of this sports betting proposal. In October, the Supreme Court affirmed a compact between Florida and the Seminole Tribe as it pertains to on-reservation sports gambling, but it noted that the existence of an exclusive compact between the state and the tribe raises equal protection concerns.[16] Given that the proposed legislation in Minnesota permits only tribes to obtain sportsbook operator licenses, equal protection issues could arise similar to those recently highlighted by the Court.
III. MINNESOTA WOULD BENEFIT FROM SPORTS GAMBLING LEGALIZATION
From a public policy perspective, the proposed sports wagering legislation brings with it numerous benefits. Legalizing sports betting in Minnesota would allow the state and its tribal government partners access to significant tax revenue.[17] Furthermore, gaming operators and professional sports teams—two groups who would be significantly impacted by sports gambling legalization—have expressed support for the proposal. [18] Thus, implementing sports wagering in Minnesota would likely benefit the state overall, and the measure is generally supported by affected parties.
Of course, when discussing whether legalizing sports wagering is appropriate, one must determine if its “value can outweigh the social costs and moral objections.”[19] To this end, with the introduction of a new means of gambling comes concerns about a potential uptick in gambling addiction.[20] This concern has been raised by Minnesota state legislators who have pledged to oppose the legislative proposal and similar measures.[21] Although these apprehensions are legitimate—as some evidence suggests creating additional measures for gambling tends to increase overall gambling—the bill’s authors have taken steps to address this issue.[22] The proposal expressly allocates significant funding from related tax revenue to programs created to help deter and treat gambling problems.[23] Moreover, though gambling addiction is a serious problem, the sports gambling legalization proposal in Minnesota appears to adequately take the issue into account.
On the whole, given the clear legal guidance from Murphy leading to the emergence of sports betting markets nationwide, Minnesota risks falling behind the trendline and losing out on substantial tax proceeds if they do not take action to permit sports wagering within its borders. Legislative measures often take months or even years to come to fruition so Minnesota should consider adopting the North Dakotan tribal gaming compact model in the meantime. Specifically, Minnesota should build upon its existing relationships with tribal gaming operators to open sports betting opportunities to its citizens within reservation borders. Nonetheless, as legal challenges to sports gambling frameworks arise in the wake of Murphy, Minnesota legislators should keep a close eye on these cases to augment their sports betting legalization efforts.
[1] Rida Khan, The Explosive Growth of Sports Betting, Visual Capitalist (Mar. 31, 2023), https://www.visualcapitalist.com/sp/the-explosive-growth-of-sports-betting/#:~:text=In%202022%2C%20the%20sports%20betting,%2C%20table%20games%2C%20and%20iGaming [https://perma.cc/TT3D-VKVH] (“In 2022, the sports betting market showed the fastest growth in all commercial gaming segments, with a staggering 75% increase in revenue year-on-year.”); Minn. Stat. § 349.12, subdiv. 24 (2023) (listing lawful forms of gambling in Minnesota, which does not include sports gambling).
[2] Murphy v. Nat’l Collegiate Athletic Ass’n, 138 S. Ct. 1461, 1478 (2018) (“The PASPA provision at issue here—prohibiting state authorization of sports gambling—violates the anticommandeering rule. That provision unequivocally dictates what a state legislature may and may not do.”).
[3] Id. at 1470 (citing 28 U.S.C. § 3702(1)) (“PASPA’s most important provision, part of which is directly at issue in these cases, makes it ‘unlawful’ for a State or any of its subdivisions ‘to sponsor, operate, advertise, promote, license, or authorize by law or compact . . . a lottery, sweepstakes, or other betting, gambling, or wagering scheme based . . . on’ competitive sporting events.”).
[4] Mark Brnovich, Betting on Federalism: Murphy v. NCAA and the Future of Sports Gambling, 2017-2018 Cato Sup. Ct. Rev. 247, 248 (2018) (“When PASPA was adopted, Nevada allowed sports gambling in casinos, while three other states-Delaware, Montana, and Oregon hosted sports lotteries or allowed sports pools. PASPA expressly grandfathered in these activities.”).
[5] Murphy, 138 S. Ct. at 1476 (“The legislative powers granted to Congress are sizable, but they are not unlimited. The Constitution confers on Congress not plenary legislative power but only certain enumerated powers. Therefore, all other legislative power is reserved for the States, as the Tenth Amendment confirms. And conspicuously absent from the list of powers given to Congress is the power to issue direct orders to the governments of the States. The anticommandeering doctrine simply represents the recognition of this limit on congressional authority.”).
[6] Brnovich, supra note 3, at 254 (citing N.J. P.L. 2018, ch. 33 (2018), Assemb. No. 4111) (“Murphy‘s most immediate result, of course, was that it cleared the way for New Jersey to legalize sports gambling. New Jersey promptly did just that.”).
[7] Interactive U.S. Map: Sports Betting, Am. Gaming Ass’n (last updated 2024), https://www.americangaming.org/research/state-gaming-map [https://perma.cc/9U3Z-QLBX].
[8] E.g. Ohio Rev. Code Ann. §§ 3775.03–.99 (West 2022) (establishing a legislative framework for sports gambling in Ohio).
[9] James MacPherson, Gov. Burgum, North Dakota Tribes Sign Gambling Compacts, Associated Press (Dec. 2, 2022), https://apnews.com/article/sports-north-dakota-betting-gambling-475c8fb2cb12327c7669c1417a2ecc09 [https://perma.cc/VK2X-TN4K]. Compacts are for contracts made between sovereign bodies. See Compact, Black’s Law Dictionary (11th ed. 2019); Gaming Compacts, Minn. Indian Gaming Ass’n, https://mnindiangamingassoc.com/about/gaming-compacts [https://perma.cc/FKS9-9XDW] (presenting detailed information on the terms of existing compacts between Minnesota and tribal gaming operators).
[10] Minn. Stat. § 349.12, subdiv. 24 (2023) (“‘Lawful gambling’ is the operation, conduct or sale of bingo, raffles, paddlewheels, tipboards, and pull-tabs.”).
[11] See California v. Cabazon Band of Mission Indians, 480 U.S. 202 (1987) (ruling that tribal governments have the power to conduct gambling activities within their lands as long as they are not criminally prohibited by state law).
[12] See, e.g., 25 U.S.C. § 2703 (defining classes of gaming); see also Michigan v. Bay Mills Indian Cmty., 572 U.S. 782, 785 (2014) (“The [Indian Gaming Recovery] Act divides gaming into three classes. Class III gaming . . . includes casino games, slot machines, and horse racing . . . A tribe may conduct such gaming on Indian lands only pursuant to, and in compliance with, a compact it has negotiated with the surrounding State.”); Samuel Fishman, Gambling on Compacts, SportsBusiness (Apr. 5, 2022), https://www.sportbusiness.com/2022/04/samuel-fishman-gambling-on-compacts [https://perma.cc/B2BF-P632](“Class III includes all other forms of gaming—including sports gambling.”).
[13] History of Gaming, Minn. Indian Gaming Ass’n, https://mnindiangamingassoc.com/about/history-of-gaming/#1461601215954-218692c5-6aaa [https://perma.cc/XFA5-5FFR].
[14] S.F. 1949, 93rd Leg. § 2, subdiv. 1 (Minn. 2023) (“A person 21 years of age or older may participate in mobile sports betting within the state provided the person places all wagers with a [licensed entity].”).
[15] Id. § 8, subdiv. 3 (“A mobile sports betting operator must: (1) be an entity wholly owned and controlled by an Indian Tribe.”).
[16] W. Flagler Assocs., Ltd. v. Haaland, 144 S. Ct. 10 (2023) (mem.).
[17] Rochelle Olson, Sports Betting Idles on Minnesota Sidelines as Football Season Kicks Off, Star Trib. (Sept. 10, 2023), https://www.startribune.com/sports-betting-minnesota-2024-legislature-legalized-gambling/600303448/#:~:text=The%20DFL%2Dcontrolled%20Legislature%20and,Sen. [https://perma.cc/XA7M-GNSW] (“In Minnesota, legislative staff estimated the state’s revenue share at $40 million, a number that [Sen. Matt] Klein believes will be higher when [sports gambling is] legal.”).
[18] Id. (When asked about sports gambling, “[b]oth Canterbury Park in Shakopee and Running Aces Casino in Columbus already allow sports betting on horses and say they’re equipped to take more bets.”); Fox 9 Staff, Minnesota Tribes, Pro Teams Support Sports Betting Legislation, Fox 9 (Feb. 21, 2023), https://www.fox9.com/news/minnesota-tribal-communities-signal-support-for-sports-betting [https://perma.cc/M7UF-XF9E] (“[T]he state’s sports teams issued a joint statement in support of the legislation. ‘We are happy to report that the state’s professional sports teams, including the Loons, Timberwolves/Lynx, Twins, Wild, and Vikings have come to an agreement with the Minnesota Indian Gaming Association in support of the draft sports betting bill . . .,’ the statement read in part.”).
[19] Thomas Lee Hazen, Filling a Regulatory Gap: It Is Time to Regulate Over-the-Counter Derivatives, 13 N.C. Banking Inst. 123, 125 (2009).
[20] This concern was directly referenced in Murphy, with the Court noting that “[o]pponents contend that legalizing sports gambling will hook the young on gambling, encourag[ing] people of modest means to squander their savings and earnings.” Murphy v. Nat’l Collegiate Athletic Ass’n, 138 S. Ct. 1461, 1484 (2018).
[21] E.g., Olson, supra note 17 (“Sen. Scott Dibble, DFL-Minneapolis, is a no vote because he’s concerned that the ease of betting increases the likelihood and incidence of gambling addiction.”).
[22] See, e.g. Meghan Gunn, These Are the Real Dangers of the Sports Betting Boom for Young Men, Newsweek (Mar. 22, 2023), https://www.newsweek.com/2023/04/07/sports-betting-boom-linked-rising-gambling-addiction-anxiety-suicide-1789055.html [https://perma.cc/HH8V-28L6] (“In 2021 (the most recent year for which data is available), calls to the helpline run by the National Council on Problem Gambling, a gaming industry supported group, rose 43 percent, while texts increased 59 percent and chats jumped 84 percent.”).
[23] S.F. 1949, 93rd Leg. § 2, subdiv. 7(e)(1) (Minn. 2023) (25% of all tax revenues from sports gambling are dedicated to “the compulsive gambling treatment program . . . and [25%] is for a grant to the state affiliate recognized by the National Council on Problem Gambling to be used to increase public awareness of problem gambling, provide education and training for individuals and organizations providing effective treatment services to problem gamblers and their families, and research relating to problem gambling.”).