In Response: Tribes urge caution on sports betting in Minnesota
From the column: "This form of gambling is far from the certain 'pot of gold' some believe it to be."
The News Tribune’s Feb. 25 editorial supporting sports betting in Minnesota ( Our View: “A sure bet being squandered again in St. Paul ”) was off the mark in several key respects.
First, the Minnesota Indian Gaming Association is on the record opposing any expansion of off-reservation gambling, including sports betting. While tribal leaders are always willing to meet with state leaders on legislative matters, we have not "found common ground" on sports betting, as the editorial urged. In fact, we have expressed our concerns that, for Minnesota tribes, the authorization of sports betting could have unforeseen consequences to existing gaming operations that support tribal governments and members. This is why tribes have advocated for a wait-and-see approach to sports betting while studying outcomes in other states, particularly those with a robust tribal gaming presence.
Second, the editorial’s calculation of potential tax revenues generated, attributed to the American Gaming Association, was wildly inaccurate. Sports betting is taxed by the states on net revenues, not on the total of all bets placed, an amount known in the industry as “the handle.” Net revenue is what's left of the amount wagered after prize payouts and operating expenses.
In Nevada, for example, in 2019, $5.32 billion was wagered on sports. That $5.32 billion in “handle” generated net revenue for operators of $329 million. This produced $22.2 million in revenue for the state, which taxes sports bets at a rate of 6.75% of net revenues.
The editorial projected that Minnesota may see $2 billion in annual betting handle. Off that, sports book operators would realize $120 million in net revenue. Using the editorial’s projection of a 5% tax, that would result in increased state revenue of $6 million, which is $94 million less of a "windfall" than was suggested in the editorial.
As Minnesotans and the Legislature consider whether to authorize sports betting, they need and deserve accurate information on which to base judgments. It is important people understand that this form of gambling is far from the certain "pot of gold" some believe it to be. It is a low-margin activity that requires opening the door to new ways of placing bets, potentially creating a whole new set of risks and unintended consequences — not only for tribal casinos but for all the state’s gaming stakeholders.
Today, Minnesota has a diverse, well-regulated gambling landscape, and casino-style gaming is limited to tribal casino destinations. The state should consider very carefully before possibly disrupting an economic engine that currently serves, and serves very well, tribal governments, rural communities, and Minnesota's citizens.
Andy Platto of Minneapolis is executive director of the Minnesota Indian Gaming Association.