The debate about sports betting in Minnesota began again on Wednesday with a lot of talk about the bad and ugly parts of legal wagering, but any talk of good will have to wait for another day.
Members of the Minnesota Senate's Finance Committee held an "informational hearing" in Saint Paul regarding the "economic, health, and social harms resulting from online sports betting."
The result was a two-hour course on concerns ranging from the impact of sports betting on household finances, domestic violence, and mental health overall.
We'll sit this one out
Democratic-Farmer-Labor Sen. John Marty, the chair of the committee, made it clear in a press conference before the meeting that the hearing was about "problems," and not benefits.
Marty said a few representatives of the online gambling industry had signed up to testify on Wednesday but withdrew after they heard the hearing would focus on risks rather than potential rewards.
“They're basically preying on vulnerable people, and they don't want to talk about that,” the chair said. “So I think they'd rather ignore the hearing.”
The witness list and written submissions make it pretty clear that this is not going to be a pro-industry hearing: pic.twitter.com/aGJyCXZhEy
— Geoff Zochodne (@GeoffZochodne) January 8, 2025
Marty will be one of several lawmakers who will introduce legislation this year to authorize sports betting in Minnesota. However, his version will be more conservative than others, and will likely include proposed bans on in-game wagering and push notifications, which he put forward last year.
Minnesota is one of the 11 holdout states that have yet to authorize retail or online sports betting in the U.S. Because of this, the debate about legalizing event wagering is an annual thing in Saint Paul, and 2025 will be no exception. The legislative session will officially begin on Jan. 14.
Marty’s preview also set the tone for what Wednesday’s meeting would be, which was highlighting the possible problems Minnesotans may face if the legislature authorizes online sportsbooks in the Midwestern state. Extensive testimony was provided to lawmakers about the potential pitfalls, which could influence legislation and the debate over its passage.
Getting schooled
Several academics presented their findings about the effects sports betting has had in the U.S., such as Professor Brett Hollenbeck of UCLA, who discussed a working paper that looked at wagering’s impact on consumer financial health. The main finding of that paper was that the average credit score in states with legalized sports betting decreased by around 0.3%, or around 1% with legalized online gambling.
“Which is about seven literal points on your credit score,” Hollenbeck told the committee over video. “But I would also stress that small effect is measured over the full population, and we don't expect the majority of people in the state are even participating in legal gambling, let alone developing problematic habits. So it suggests that for the people who are potentially problem gamblers, they may be experiencing a very large decrease in their credit scores, so much so that it shows up in the average for the full population.”
Northwestern University Professor Scott Baker highlighted to the committee their findings on household finances, which included that increased sports betting did not displace other forms of gambling or entertainment but instead reduced savings.
“This gambling is obviously a very popular pastime, but I think we have to consider some of the financial ramifications for households,” Baker said. “We do find some reductions, quite sizable reductions, in investments, which is often something state and federal governments are trying to really encourage. And a lot of this burden seems to fall on more financially constrained households who might already be struggling in other things.”
'The big con'
Les Bernal, the national director of Stop Predatory Gambling, a D.C.-based non-profit, warned of “the big con,” and defined predatory gambling as “powerful” corporations partnering with states to use commercialized gaming as a for-profit business.
“It's taking a known, dangerous, and addictive product and then blending it with a fraudulent and manipulative financial scheme,” Bernal said.
Parts of this “con,” according to Bernal, include the odds constantly being stacked against the players, that taxpayers ultimately wind up paying more for fewer services because of legalized gambling, and “phony narratives” deployed by the industry.
Matt Litt, a lawyer for “victims of online sports betting operators,” said he has begun focusing on VIP programs. Those programs are becoming a growing concern for lawmakers and regulators and could be a subject considered by Minnesota legislators.
“I receive 10 to 15 emails and calls a week from addicted gamblers and their families and almost every single one of them had a VIP host who led them to the dire straits that they find themselves in now,” Litt said. “The gamblers are told, ‘if you gamble X number of dollars, well then I can put in an extra Y into your account.' Oftentimes the VIP hosts tell the gamblers, ‘I wish I could help you, but you need to be gambling at a higher level. You need to be depositing at a higher level.’”
Litt added that the United Kingdom and Ireland are “years ahead” in the regulation of VIP programs, so much so that some operators doing business on both sides of the Atlantic have voluntarily curtailed those efforts abroad but not stateside.
“And there hasn't been a state yet who's had the guts to make them do it,” Litt said.
Do you hear the people sing?
There was a more supportive voice during Wednesday’s hearing, DFL Sen. Nick Frentz, who intends to back sports betting legalization this upcoming session.
“I appreciate the perspective, especially in so far as we're trying to protect certain Minnesotans from harm,” Frentz said. “We do that as a state government without trying to intrude. The simple fact is we have had testimony this morning largely ignoring the fact that many Minnesotans want to do this.”
Frentz said he "appreciated" testimony suggesting 1% to 8% of gamblers are considered problematic and suggested the legislature's focus should include protections and help for them. However, he also pointed out those numbers suggest 92% to 99% of Minnesotans would not fall into that category at all.
Another supportive and influential voice came via written testimony to the committee, from the Minnesota Indian Gaming Association and its nine member tribes.
Minnesota’s legislature will likely have multiple sports betting bills to consider and several stakeholders it will try to accommodate, including the tribes and state’s racetracks. While lawmakers have consistently struck out trying to find a workable compromise, they will take another run at this year.
MIGA Executive Director Andy Platto's letter to the committee said Minnesotans are already betting on sports today "in record numbers," either by crossing state lines or using offshore and illegal operators that lack consumer protections
“Gaming revenues have improved the lives of Native peoples and their communities in Minnesota for over 30 years,” Platto wrote. “Legalizing mobile sports wagering with tribally exclusive licenses protects and strengthens tribes' ability to operate their sovereign governments and support their communities.”
The industry speaks
While no industry representatives provided testimony on Wednesday, the Sports Betting Alliance of Minnesota (backed by BetMGM, DraftKings, FanDuel, and Fanatics) weighed in after the hearing.
"Online sports betting is already happening right now in Minnesota," said Blois Olson, spokesman for the industry group, in a statement. "But instead of using regulated and government approved products, Minnesotans are forced to use offshore and unregulated websites that brazenly flout gaming laws meant to protect consumers, ensure responsible play, and prevent minors from gaining access. In fact, some unregulated platforms have been shown to actively target minors."
This, Olson said, is why a "growing chorus" of Minnesota legislators from both parties are supportive of a "transparent" market for legal sports betting.
"It's also worth noting that Senator Marty, a longtime opponent of sports betting, did not include the perspective of Minnesota sovereign tribal nations who are key stakeholders in gaming in the state," Olson said. "In fact, he did not permit anyone to testify who did not share his perspective - not responsible gaming experts, industry representatives, or experts in the dangers of the thriving illegal sports betting market in Minnesota."
