Tribal control at issue for lone sports betting holdout in the Midwest

Thirty-seven states and the District of Columbia allow sports betting.

By: - May 1, 2023 5:00 am
Grand Casino in Hinckley, Minn., is midway between the Twin Cities and Duluth. It offers a variety of gambling options but not sports betting.

Grand Casino in Hinckley, Minn., is midway between the Twin Cities and Duluth. It offers a variety of gambling options but not sports betting, which is being debated by the Minnesota legislature. (Tom Peterson)

HINCKLEY, Minn. — Amid the flat woodlands of east-central Minnesota, the Grand Casino stands out: Its hotel is the tallest building between the Twin Cities and Duluth. The casino floor beckons gamblers with more than 1,900 slot machines and round-the-clock blackjack and poker tables.

With a golf course, an RV park and an amphitheater that has showcased artists from Aretha Franklin to Peter Frampton to Toby Keith, the Ojibwe-owned complex is a gambling destination with nearly everything.

Except sports betting.

Minnesota is an outlier in the region. All neighboring states allow gambling on sporting events, although their policies vary widely.

Nationally, 36 states and the District of Columbia have approved sports betting since the U.S. Supreme Court struck down Nevada’s monopoly on athletic event wagering in 2018. According to the American Gaming Association, an industry lobbying group, Americans bet $93.2 billion on sports in 2022, producing $7.5 billion in revenue for the regulating jurisdictions.

In Minnesota, the push is on to join them. But first, the state will have to solve an issue that has bedeviled other states: Should tribal casinos, which have long enjoyed a monopoly on legal gambling in Minnesota, be the only places through which bettors can wager on games?

With the legislative session entering the home stretch, lawmakers on both sides of the aisle have introduced bills that would legalize statewide sports betting, which polls show has broad support. Whether a bill makes it to the May 22 finish line depends not so much on the merits of wagering, but on the legislators’ ability to overcome that longstanding issue.

Democrats, citing the economic support that casinos provide the state’s 11 tribal sovereign nations, want sports betting only in the state’s 19 tribal casinos. Republicans say two metro area horse racing tracks, professional sports teams and major sporting events should be allowed to offer sports wagering.

A bill proposed by Democratic state Rep. Zack Stephenson, which has the support of the tribes and the state’s professional sports franchises, is the clear front-runner. He said it would bring in the billions of dollars now spent illegally online or legally in other states.

Stephenson’s bill would authorize in-casino and mobile sports gambling. Tribes would be licensed to open sports books, areas in casinos that allow bettors to wager on sporting events around the globe. The tribes also would receive a license to offer mobile app betting, likely through a national sports gambling company such as FanDuel or DraftKings. The state has no commercial (non-tribal) casinos.

“We have a robust black market here. People just use shady websites, digital workarounds and other means to place bets,” Stephenson said during a March hearing. “That’s what this bill is about … creating a legal marketplace that will displace that illicit market, and in doing so provide consumer protection and ensure the integrity of the game and limit money laundering and other illegal activity.”

Stephenson also elicited bipartisan laughter when he quoted Republican sports betting proponent state Rep. Pat Garofalo: “No Minnesotan should have to go to Iowa to have fun.”

Minnesota is one of six states with active legislation or pending referendums on sports betting, according to the American Gaming Association. The others are Hawaii, Missouri, South Carolina, Texas and Vermont. May marks the fifth anniversary of a U.S. Supreme Court decision that allowed states to offer wagers on athletic events.

A Midwest Outlier

Casinos hug the Minnesota border in several neighboring states, though state policies vary.

Iowa was an early sports-betting adopter. Diamond Jo Casino, located off the first Interstate 35 exit from Minnesota, opened in 2019. The casino, surrounded by miles of farmland, has partnered with FanDuel.

It offers traditional betting windows plus 20 electronic kiosks, which extend the hours of betting. Through March of fiscal year 2023, which runs through June, the casino generated more than $52 million in bets and brought in an another $195 million on mobile and other online bets.

The Hawkeye State, which taxes betting receipts at 6.75%, has earned more than $1.25 million from the rural casino so far in fiscal 2023. For the state’s 19 licensed casinos, the total tax revenue is more than $10.4 million.

In South Dakota, voters overwhelmingly approved sports betting in the Old West tourist town of Deadwood in 2020. In 2022, nearly $7.2 million was wagered in the Deadwood sports books, according to the trade publication SportsHandle.

Two South Dakota tribal casinos near the Minnesota border also offer sports betting under tribal compacts with the state. Statewide mobile betting is not allowed, and a bill to place the issue in front of voters died in February in the state House, due to concerns about gambling addiction and disagreement over how to expand mobile sports betting.

North Dakota allows sports betting and mobile apps in tribal casinos, including Dakota Magic in Hankinson, 13 miles west of the Minnesota border and mere yards from South Dakota.

Republican state Rep. Greg Stemen has introduced a bill to put sports betting on the 2024 ballot, saying state residents bet $300 million on sports annually, mostly on illegal online sites. Previous efforts to put the issue in front of voters have failed. It has faced opponents from educators, including North Dakota University System Chancellor Mark Hagerott, who testified there would be “massive negative implications” to college students.

Wisconsin tribal casinos appeared poised to grab a share of the Minnesota sports betting market, when the St. Croix Chippewa opened two sports books near the states’ border in April 2022. Both closed abruptly in mid-February with no reason listed, only a notice on the casinos’ websites saying they will be closed “until further notice.” A sports book manager declined to provide further information on the closure.

Currently only the Potawatomi in Milwaukee and the Oneida near Green Bay offer sports betting. Sports betting revenue was not available.

Minnesota Debate

Minnesota came close to authorizing sports betting last year. Legislation cleared the Democratic-controlled Minnesota House but stalled in the Republican-led Senate. This session, the Democrats hold both chambers, although their advantage in the Senate is a single vote.

Democratic Gov. Tim Walz has indicated he will sign any sports betting bill that has tribal support.

A poll of 800 Minnesotans by the Star Tribune, MPR News and television station KARE 11 in September 2022 found that 48% of Minnesotans polled approved of sports betting, with 33% opposed and nearly 20% undecided.

Stephenson said he traveled the state while researching his bill and is also monitoring other states with legalized betting. At the bill’s most recent hearing, he highlighted the benefits the state will receive from sports betting tax revenue: Youth sports and a problem-gambling assistance program would each receive 40% of the funds. The Democrats’ legislation also has the support of the state’s professional sports franchises.

“This would be the largest investment by far in any state in the country on problem gaming ever,” he said.

Religious groups and a gambling addiction expert brought up concerns at the hearing.

“For every one gambler there are seven to 10 others who suffer harm because of their loved one’s gambling,” said Susan Sheridan Tucker, executive director of the Minnesota Alliance on Problem Gambling.

But the bill got modest praise from one interfaith group that opposes sports betting.

“It’s essentially a pretty good version of something we just don’t like,” said Leah Patton, executive director of the Joint Religious Legislative Coalition.

If sports betting fails again, it likely wouldn’t be for religious or addiction concerns.

Republicans have offered competing sports betting bills and appear as committed to adding the horse racing tracks as the Democrats are with tribal exclusivity.

“If the Democrats want to support a highly partisan sports betting bill, they have the votes to do that,” said Republican state Sen. Jeremy Miller when he unveiled a GOP bill in January. “I don’t think there’s enough Democrat support to get it done.”

Miller said his bill would “provide access to as many Minnesotans who want the ability to bet on sports, to engage in that fan experience” by offering licenses to professional sports franchises and horse tracks.

The state’s tribes, meanwhile, cite their experience running gambling operations and the benefits statewide.

The Democrats’ legislation “would not only support Tribes, but would also provide a well-regulated and accessible market for the state’s sports bettors and a competitive market that is important to our state’s professional sports teams and market partners,” Andy Platto, executive director of the Minnesota Indian Gaming Association, wrote in a letter to legislative leaders.

“Gaming revenues,” he wrote, “produce the essential tax base Tribes rely on to fund basic and essential government services for thousands of tribal members.”

Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site. Please see our republishing guidelines for use of photos and graphics.

Tom Peterson
Tom Peterson

Tom Peterson is a Stateline correspondent based in Minnesota and the Washington, D.C., area. He has worked at The Washington Post, McClatchy Newspapers and Knight Ridder.