Minnesota legislature considers bills to legalize sports betting and marijuana

CATHY WURZER: Well, if you wanted to bet on the Super Bowl the other weekend legally, you would have had to cross the border to Wisconsin, Iowa, or South Dakota. Sports betting is not legal in Minnesota, but the House Commerce Committee will consider a bill today that would legalize sports betting in Minnesota. There was a news conference about the bill this morning. DFL state representative Jack Stephenson is the chief author of that bill. He's on the line right now. Welcome to the program, Mr. Chair. How are ya?

ZACH STEPHENSON: I'm well. How are you, Cathy?

CATHY WURZER: Good. Thanks for being here. Say, before we dive into your version of the bill, this issue has been around for a long while. It's gotten stalled along the way. Why is it important that Minnesota legalize sports betting when there are popular apps and websites available, like DraftKings and FanDuel?

ZACH STEPHENSON: Yeah, well, the issue is that all of our neighbors states, and 30 states overall, have legalized sports betting. This is an issue that's been coming across the entire country that people would like the opportunity to do here in Minnesota. And in fact, people can do it illegally in Minnesota right now very easily by using offshore websites. So we want a safe, legitimate market here in Minnesota that has consumer protections and that treats the issue of problem gaming with the seriousness that it deserves.

CATHY WURZER: But if you legalize it to deal with problem gaming, isn't that enabling the behavior?

ZACH STEPHENSON: Well, I think the issue is that problem gaming is going to happen regardless. And you can either be honest about it and deal with it in an appropriate downstream way by having prevention treatment and education and by having consumer protections that enables us to exclude people who have prior problem, gaming problems from the program, or we can continue with an illicit marketplace, where people who have issues with gaming don't get the resources and help they need. And frankly, there's a stigma around it. And I'd rather be out in the open where we can deal with it more honestly.

CATHY WURZER: In the past, as you know, there's been tribal gaming opposition to sports betting. But a letter sent to you from the head of MIGA, the Minnesota Indian Gaming Association, seems to indicate support. Under your bill, would the tribes control sports betting? Is that how you get buy-in?

ZACH STEPHENSON: So we have an arrangement where the 11 sovereign tribes in Minnesota will each be offered a license to operate sports betting. That makes sense because the tribes are the most successful, longest-running, safest, most heavily regulated gambling operators in the state of Minnesota. And when this issue first came to my purview as Chair of the Commerce Committee, what I did was I traveled the state. I visited all 11 of the sovereign tribes in Minnesota, and I talked to our professional sports teams.

I talked to the racetracks. I talked to the university. I talked to problem gaming groups. And I tried to build as much consensus as I can. And that's I think why we have a bill today that has a pretty broad level of stakeholder support. I mean, you mentioned the tribes, but also Minnesota's professional sports teams, all of our professional sports teams support the bill.

CATHY WURZER: Does the state get a cut of revenue under this bill?

ZACH STEPHENSON: We would tax the mobile sports betting at 10% of net revenue. But it's important to understand that sports betting is a high volume, low margin business, which means this isn't going to be a really significant revenue driver for the state. And that's not the reason to legalize sports betting. On average, this is going to generate $10 to $12 million a year for the state. In the context of a $60 billion budget, that's not a huge amount of money.

What we will do with that money is put it towards things that are directly related. One, about 40% of the money generated by the bill would go to treat and do education and prevention around problem gaming. Another 40% of the money would go to youth sports and particularly areas that have high levels of juvenile crime because we know that when kids are busy playing sports, they're not busy getting into trouble doing other things. And the balance of the money would go to fund the regulation and consumer protections that are necessary to make sure this is a safe product for Minnesotans to participate in.

CATHY WURZER: So I notice, as I'm quickly going through the bill here, Canterbury Park and the Harness Track seemed shut out of this deal. Why is that?

ZACH STEPHENSON: Well, again, I think the issue here is this would be the most significant expansion of gaming in the state of Minnesota since the tribal compacts were signed about 30 years ago. And so when I put the bill together, the question was, who makes sense to work with for this significant expansion? And I think the entities that have the most experience, have the most success, are the most highly regulated are the tribes. They're also geographically dispersed throughout the state, in rural Minnesota and closer into the metro. So I think they make sense as a partner.

CATHY WURZER: Could there be a point, though, where Canterbury and the Harness Track are cut in on the deal at all? Or are they completely out in the cold?

ZACH STEPHENSON: We're going to keep talking to everybody. I will tell you that there's a lot of resistance to the capital of expanding gambling at the tracks and other places. I'll also note that the letter of support that the professional sports teams gave in support of my bill indicates that if anybody else was able to do it other than the tribes, and they want to do it too-- in other words, if we were to include the tracks in the sports betting bill, then we should also include the teams.

That's their position. So then you're really talking about expanding this much further than I think most legislators would be comfortable with. So I don't anticipate seeing expanded gaming at the tracks as a result of this bill.

CATHY WURZER: So let me ask you. Last year, legalized sports betting stalled in the Senate. Are you pretty confident you have the votes this time around?

ZACH STEPHENSON: There's a lot of new faces in the Senate, so we're going to have a lot of conversations. But I think we have good momentum there. My Senate counterpart who's carrying the bill, Senator Klein, is working hard. And I'm optimistic that we'll get it done.

CATHY WURZER: I'd like to change topics for a moment because you're also the chief author of the bill that would legalize cannabis in Minnesota, recreational cannabis, and that was in the House Finance and Policy Committee today. One issue they came up was keeping medical and recreational marijuana separate. Can you speak to why that decision was made?

ZACH STEPHENSON: So we really want to keep a good medical program in Minnesota. And the reason for that is pretty straightforward. There are people for whom the adult market wouldn't work. One example is children. There are children who have terrible seizure disorders, for example, that are effectively treated with cannabis.

And if we allow the medical program to go away, those kids are not going to have access to the medicine they need to have a good quality of life. So it's really important for us to continue the medical program going into the future and make sure we stabilize it because in states that have legalized adult use cannabis, there have been some challenges for the continued existence of the medical program.

CATHY WURZER: As you know, some local governments are concerned. Are their concerns to enact tougher restrictions included in the bill?

ZACH STEPHENSON: Yeah, so what we have done here is establish a system of really strong regulation that's primarily at the state level. That way, there is a consistent approach across the entire state. Other states that have legalized cannabis have allowed local communities, counties, cities, to opt out and say, I'm sorry. We're not going to have any cannabis in this county. What that does is it really feeds the illicit marketplace. It gives them a place where they can thrive. And one of the goals of this bill is to transition from an illicit marketplace to a legitimate marketplace.

So we want that regulation at the state level. At the same time, we know that local units of governments, cities, and counties are probably better positioned to do some of the enforcement work, making sure that dispensaries aren't selling to kids, making sure that dispensaries aren't selling products that aren't approved for sale by the statewide agency. So there's a dual approach here where the state does a lot of the regulation, and then we partner with our local units of government on enforcement, some happening at the state level, some happening at the local level.

CATHY WURZER: Because there was the mess last year when it came to THC, and the state let the local governments deal with it on their own, would this put the existing edible, beverage, hemp-derived THC producers out of business?

ZACH STEPHENSON: No. It would not put them out of business. It would create a regulated marketplace around them. And that would solve some of the problems that have cropped up since that bill passed last year. So for example, we would move those edible products, the gummies, behind the counter in establishments to try and limit youth access to it. But these products have proven very popular with consumers and with businesses.

And in fact, has been a really positive thing for a lot of our craft breweries, the local breweries that are offering THC-infused beverages. So we're not going to-- that market is not going away. We just want to put some guardrails on it, some reasonable regulations and restrictions to make sure that we have safe products that are staying out of the hands of kids.

CATHY WURZER: All right, Mr. Chairman. I know you're busy. Thanks for your time here this afternoon.

ZACH STEPHENSON: My pleasure. Any time.

CATHY WURZER: Representative Zack Stephenson is the chief author of a bill to legalize sports betting, another bill to legalize adult use cannabis in Minnesota.