Will Racetracks Decide Minnesota Sports Betting Fate?

For the past few years, at least some aspects of the Minnesota sports betting push has been derailed by a shaky dynamic between the state’s racetracks and tribes. And it doesn’t sound like that’s going to change.

Earlier this summer, The Star-Tribune reported that Governor Tim Walz appointed two tribal leaders to the Minnesota Racing Commission. Not surprisingly, the owners of the state’s racetracks are displeased with the decision.

This might not seem like a big deal on its face. However, efforts to legalize sports betting in Minnesota have struggled to overcome disagreements between tribal and racetrack officials. This latest news feels like it will only further complicate the relationship.

All of which, in turn, raises a pivotal question: Does the fate of Minnesota sports betting rest on the ability for the state to find a compromise between tribes and racetracks?

How Racetracks Have Factored into the Minnesota Sports Betting Outlook

Let’s first begin with the recurring issue that continues to complicate the legalization of Minnesota sports betting.

On a couple of occasions, bills that green light sports wagering have received plenty of support. However, racetracks want to be among the entities allowed to run sportsbooks. Tribes in Minnesota have so far resisted this push from track operators. Their argument is clear: They don’t want to expand the competition they will face. Various proposals, after all, call for multiple online sportsbooks in the United States to receive licenses. Allowing racetacks to receive licenses would dilute the market share even more.

Racetracks have in turn argued they need the means to diversify their business model. Right now, they are heavily reliant on foot traffic. The legalization of Minnesota sports betting does not change that. But having a sportsbook on-site would give potential patrons an additional reason to show up. They wouldn’t just need to have an interest in horse racing. They would have the opportunity to bet on other sports.

Finding a middle ground has proven difficult. Tribes have approved an addendum that cuts racetracks in on Minnesota sports betting revenue. Under this proposal, tracks receive a percentage of profits from sports betting. Supporters of this model believe it allows racetracks to cash in on sports betting without directly infringing upon tribal operations.

As you can probably tell, since sports betting in Minnesota still isn’t legal, the tracks have so far not warmed up to this offer. Optimists remain hopeful that may change. But another wrinkle must now be part of the calculus.

Tracks are Not Happy That Governor Walz Added Tribal Officials to the Horse Racing Commission

This brings us to the latest issue. Owners of racetracks in the market are annoyed that Governor Walz has added a pair of tribal officials to the Minnesota horse racing commission. Here is The Star-Tribune’s Rochelle Olson with more details:

“Late Friday, Walz appointed Mille Lacs Band of Ojibwe chief executive Melanie Benjamin and Johnny Johnson, former president of the Prairie Island Indian Community. Both tribes run casinos in MInnesota. ‘The Racing Commission’s job is to regulate the industry and our two leaders, President Johnson and Chief Executive Benjamin are more familiar than probably anybody in the state on the regulation of gambling,’ Walz said, referring to them as ‘two good folks’ who ‘understand that responsibility.’

The state’s two horse-racing tracks, Canterbury Park in Shakopee and Running Aces in Columbus, were not pleased. In recent years, the struggling tracks have been pushing to offer additional gambling options to their customers as a means of survival and to boost the purses for live racing. ‘We do not believe it is appropriate for competitors of the racetracks to serve in the role of our regulators, and it would be difficult to find a precedent for the recent appointments of long-time leaders of tribal nations that own two of the state’s largest casino operations as members of the Minnesota Racing Commission,’ Canterbury Park CEO Randy Sampson said in a written statement.”

Whether this move actually impacts the Minnesota sports betting debate remains to be seen. But the state by and large works in collaboration with the tribes. Installing officials from two of the biggest casino operators as regulatory extensions is nothing if not proof of that relationship.

Is This Latest Development Good News or Bad News for the Future of Minnesota Sports Betting?

First thing’s first: Everything posited here is speculative. This appointment is still fresh. And Minnesota’s next round of legislative sessions remains a ways off. We can’t be sure how this decision impacts the discourse until those conversations actually begin.

And yet, given how close Minnesota sports betting reportedly came to legalization, we have to believe this appointment bodes well for the next initiative.

Of course, “bodes well” is a relative phrase. It almost certainly does not spell good news for the leverage or influence racetracks have in negotiations. We could, in theory, see less friendly terms for these tracks in the next Minnesota sports betting bill.

At the same time, this could also go the other way. Perhaps having two tribal officials on the Minnesota Horse Racing Commission makes it more likely that a compromise can be reached. This should, after all, accelerate dialogue on the matter.

On the flip side, racetracks and tribes must be open to having that conversation. And they must also be open to further compromise. If both parties continue to draw hard-line stances, it’ll be difficult to make headway. At that point, the push for sports betting in Minnesota could turn combative. And when an issue is that divisive, it severely diminishes the chances of a measure getting through.

Again, this is all speculative. We’ll have to wait until sometime in 2025 before knowing the full breadth of the impact this appointment from Governor Walz has on the possibility of Minnesota sports betting.

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