Minnesota Legislature’s first order of business: Do not legalize online sports betting • Minnesota Reformer

Of all the good things the DFL-controlled Minnesota Legislature achieved during their 2023-24 trifecta — free college for working families, paid leave, free school meals — they should also be applauded for something they didn’t do. 

They didn’t legalize sports betting, and mobile sports betting in particular. 

This was less a rational policy decision than a legislative failure on the part of the gambling industry’s advocates and allied lawmakers, but as my father always says, “I’d rather be lucky than good.” 

And we are lucky we didn’t put an always-on sportsbook in the pocket of every Minnesotan. 

Just since the 2024 legislative session ended without a deal on sports gambling, evidence has continued to mount that legalization of online sports betting leads to all manner of bad — if entirely expected — outcomes. 

Bloomberg reported this week that “20% of the money the (Brazilian) government handed out for its flagship social program in August was spent at online gambling sites,” while the number of gamblers in Brazil has doubled in the past six months. 

Here in the United States, the U.S. Supreme Court decision allowing states to legalize sports betting has provided an excellent natural experiment in what happens in states that have legalized — including many of Minnesota’s neighbors — and those that have not. 

A professor at the UCLA Anderson School of Management found with two USC colleagues that legal online gambling led to “a roughly 28% increase in bankruptcy likelihood and an 8% increase in debt collection amounts.” 

No surprise that they also record a drop in credit scores. 

(Minnesotans have traditionally ranked tops in the nation on our credit scores.)

“We find a pattern suggesting that effects are strongest for low-income younger men,” they write. 

This seems not great. 

In another study of 230,000 households, a professor of finance at Northwestern, joined by colleagues from BYU and Kansas University, found that legal online sports betting led to “heightened financial instability as households run-up credit card balances and more frequently overdraw their bank accounts.”

“The causal effect of $1 of online sports deposits,” they write, “is a reduction in net investment of just under $1.”

These are dark portents for legal online sports gambling in Minnesota, given what we already know about our taste for games of chance. 

A Wilder Research report for the state Department of Human Services found that 56,000 Minnesota adults — or 1.3% — are problem gamblers, which means they’ve lost control; 162,000 adults, or nearly 3.8%, are “at risk.” 

Taken together that’s more than 200,000 Minnesotans. 

Over one-quarter of adults in Minnesota “know someone whose gambling may be causing them financial difficulties; impacting their health; or damaging their personal, family or work relationships,” according to the report, whose authors conducted a survey of 8,512 respondents.  

Minnesotans spent roughly $6.5 billion on gambling in 2022, including pull tabs, other charitable gambling, lottery tickets and gambling at tribal casinos, as the Reformer’s Chris Ingraham reported earlier this year. Revenue from e-pull tabs, which are the slot machine(ish) devices you find at bars, has increased by nearly 1,100% since 2017 while paper pull tab revenue is up by 44%. 

Moreover, low-income Minnesotans are most susceptible to gambling’s false promise of a quick route out of poverty. 

Ingraham analyzed retailer-level sales data to find that state lottery revenue comes disproportionately from people in Minnesota’s low-income neighborhoods, “effectively turning the state lottery into a highly regressive tax on the working class.”  

Here’s the startling data: In the poorest 5% of ZIP codes, where families bring in an average of $45,000 per year, the typical adult spends about $150 on the lottery annually.  

Scariest of all, legalized online sports betting seems to increase the risk of domestic violence, according to a paper by the University of Oregon’s Emily Arnesen and Kyutaro Matsuzawa. 

Minnesota dodged a bullet by not legalizing online sports betting this year. 

To legalize now would be the equivalent of reloading the gun and handing it back to the gambling industry.