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The Allied Charities of Minnesota (ACM) has reached an agreement with the House sponsor of a sports-betting bill that will see them support the measure in exchange for additional tax relief that will assist charities that rely on financial support from charitable gaming.
Under the deal reached with Representative Zack Stephenson, a member of the Democratic-Farmer-Labor (DFL) party and sponsor of House File 2000, the ACM has agreed not to lobby the state legislature to change legislation from 2023 that banned the use of an open-all feature on electronic pull-tab machines in Minnesota.
In exchange, Stephenson will increase the tax on sports betting under HF 2000 from 10 percent to 20 percent to cover $40m in new tax cuts for charitable gambling. The ACM runs charitable pull-tab operations in bars and restaurants throughout the state.
ACM executive director Rachel Jenner issued a letter of support Tuesday (March 19) for the agreement, saying the “historic increase in tax relief” will directly assist charities that rely on support from charitable gambling.
“Once fully implemented, it is projected that for the first time in recent years, charitable gambling organizations could earn and receive more funds to support charities than they will pay the state in taxes,” Jenner said.
Through a 2023 budget law, the state legislature banned the “open-all” options and bonuses on electronic pull-tabs, which means the tabs need to be opened individually and not with a single touch. The change in the law is set to take effect in January 2025.
Traditional paper pull-tabs only allow players to reveal their symbols individually, while the “open all” feature in e-tabs allows players to reveal rows of symbols at once.
Under the statute that regulates e-tabs, players now “must activate or open each electronic pull-tab ticket and each individual line, row, or column of each electronic pull-tab ticket.”
Minnesota legalized electronic pull-tab machines in 2012 as part of the legislation to build U.S. Bank Stadium, which hosts the National Football League’s Minnesota Vikings.
Jenner reiterated that the ACM will not seek to revisit the changes made last year at least until the full impact of the new restrictions and the accompanying tax relief can be jointly assessed.
In fiscal year 2022, charitable gaming resulted in $157m being contributed to charities across the state and $193m in state gaming taxes, according to the ACM.
Stephenson was unavailable for comment on Tuesday. He told the Minneapolis Star-Tribune that the agreement was an important step in the right direction, but there was more work to do to pass a sports-betting bill this session.
The issue of how charitable gambling would be affected by mobile and retail sports betting has been an issue for some members of both parties in the state legislature. Republicans in the state's Senate have also sought to have the state’s two racetracks included in any bill that legalizes sports wagering.
Andy Platto, executive director of the Minnesota Indian Gaming Association (MIGA), said tribes recognize the important contributions made by charities to the state of Minnesota.
“We are supportive of the charitable tax relief language in this bill,” Platto said in a statement Tuesday.
“We intend to continue working with legislative leaders and other stakeholders in an effort to develop a sports-betting proposal that will best serve the interests of all Minnesotans,” he added.
Stephenson’s amended bill has a hearing scheduled for Thursday (March 21) in the State and Local Government Finance and Policy Committee.
Should the committee approve HF 2000, it still has several more committee stops remaining before it can be voted on by the full House.
A separate bill is also being considered by the Minnesota Senate, with amendments added to Senate File 1949 earlier this month to prohibit all in-play sports wagering.
