St. Paul, MN – Advanced deposit wagering (ADW) legislation is making its way through the Minnesota legislature which would legalize internet wagering on horse racing in the state.
ADW is an online mechanism whereby individuals deposit money into an account and are able to then place bets on horse races taking place around the world.
House File 3211 introduced by Rep. Joe Hoppe (R-47B) on March 16 provides for the registration of ADWs in Minnesota as well as a methodology for the distribution of funds designed to provide administrative support and additional funding for the state’s breeders’ fund. A companion file, SF 2835, is making its way through the state senate, introduced by Senator Dan Sparks (DFL-27).
Under current Minnesota law, internet wagering is illegal, though some ADW providers have done business with Minnesota residents under a loose interpretation of the law, siphoning off an estimated $20,000,000 in wagering out of the state with no benefit to the state or its racetracks. While the bill would make ADW legal in Minnesota, the prohibition on wagering on Minnesota races by in-state residents will continue.
Under the provisions of the bill ADW providers such as TwinSpires, ExpressBet, TVG, etc. will need to obtain a Class C license granted by the MRC at $10,000. The providers will also need to post a $1,000,000 bond payable to the State and file a complete plan of operation which needs to be approved by the Commission.
Once the entity is licensed a ‘source market fee’ will have to be set for the tracks that will offer the signal and the ADWs that wish to carry it. It is expected that Canterbury and Running Aces will negotiate these fees.
According to the legislation, 28% of the source market fee will go to Running Aces with 72% going to Canterbury Park which reflects their total share of pari-mutuel handle in the state.
Each track will be required to set aside 50% of their share for breeders’ awards and purses with 35% of that amount to go into the respective breeders’ funds while the remainder is to go into the purse fund.
Other fees on ADW providers will include a 1% fee on all amounts wagered by Minnesota residents with another ¼ of 1% to be levied for the administrative fees of the state’s breeders’ fund.
The funds provided to the MRC will help make the racing industry in Minnesota self-funding and will therefore require no additional funds from the state’s general fund, saving general fund money for other state purposes.
An additional provision in the legislative moves the revenue from fines for racing and regulatory violations from the general fund and credited to “a racing and card playing account in the special revenue fund and appropriated to the Commission to support racehorse adoption, retirement and repurposing.”
Monies will accrue in a special revenue fund instead of going to the general fund and the Commission will set up a mechanism on how to allocate those funds.
Both bills have received wide bi-partisan support in both legislative houses and is supported by all horsemen’s groups as well as Canterbury Park and Running Aces Harness Park.
“We support this legislation while-heartedly,” said Tom Metzen Sr., President of the Minnesota HBPA.
Jay Dailey, President of the Minnesota Thoroughbred Association agreed.
“This legislation is significant in three important areas,” Dailey said. “First, it offers consumer protection by requiring licensure and approval of ADWs in the state so no one can be burned by any ‘fly by night’ companies.
“Second, as Thoroughbred racing has grown the last few years thanks to the Canterbury/Shakopee Mdewakanton Sioux Community agreement, the costs of regulating the industry have also increased. The funding mechanism in the bill helps make our industry self-funding and a real revenue generator through the jobs and the other economic benefits that the racing industry provides.
“Finally,” Dailey concluded, “and of great importance to the state’s Thoroughbred breeders, there will now be a significant secondary revenue stream going to the state breeders’ fund. This is something we’ve been looking to find for a while now and should keep the growth we’ve seen the last few years continuing in the right direction.”
Tom DiPasquale, Executive Director of the Minnesota Racing Commission, praised “all segments of the Minnesota racing industry, including Minnesota’s race tracks and representatives of the state’s Thoroughbred, Quarter Horse and Standardbred organizations, for their support of the bill.”