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Gambling in Minnesota: a Short History

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March 2005 Gambling in Minnesota A Short History This report describes the evolution of gambling in Minnesota since 1945, with particular attention to the role of the legislature. It covers charitable gambling, pari-mutuel racing, the state lottery, Indian gaming, and other gambling forms that have been proposed in Minnesota over the years. This report was prepared by John Williams, legislative analyst in the House Research Department. Questions may be addressed to John at 651-296-5045. Julie Fastner and Carol Thompson provided secretarial support. Copies of this publication may be obtained by calling 651-296-6753. This publication can be made available in alternative formats upon request. Please call 651-296-6753 (voice); or the Minnesota State Relay Service at 1-800-627-3529 (TTY) for assistance. Many House Research Department publications are also available on the Internet at: www.house.mn/hrd/hrd.htm. Contents Gambling in Minnesota 1945-2005: Timeline .............................................................................1 1945-1981: Legalizing What’s Already Going on ......................................................................7 The First Bingo Law........................................................................................................7 Slot Machines Driven Out ...............................................................................................7 Further Attempts to Regulate Bingo................................................................................8 Unintended Consequences...............................................................................................9 1982-1992: Creating A Gambling Industry..............................................................................11 Pari-mutuel Betting Bill Passes .....................................................................................11 The State Takes Over Charitable Gambling Regulation ...............................................12 Video Games of Chance Legalized ...............................................................................13 Implementing the New Charitable Gambling Law........................................................14 Criticism and Reform of Charitable Gambling..............................................................16 Charitable Gambling For Whose Benefit?.....................................................................19 Canterbury Ups and Downs...........................................................................................21 Indian Gaming Outgrows the Bingo Parlor ...................................................................29 With Congressional Blessing, Indian Gaming Takes Off..............................................31 The Voters Say Yes to a Lottery....................................................................................34 Lottery Revenues and What to Do With Them .............................................................37 Department of Gaming Comes and Goes ......................................................................39 Gambling in the Mainstream .........................................................................................40 1992-1997: Gambling Moratorium ...........................................................................................41 The Moratorium Withstands a Host of Challenges .......................................................41 The Video Lottery Controversy.....................................................................................44 The Advisory Council Advises No Change...................................................................47 Racing Returns to Canterbury........................................................................................47 Charitable Gambling—Reversing the Reforms.............................................................49 Indian Casinos Dominate the Gambling Scene .............................................................50 Gambling is Dealt into the Stadium Game ....................................................................52 Charitable Gambling: Achieving the Industry Agenda ................................................55 Dealing with Compulsive Gambling .............................................................................56 1999 and After: The Post-Moratorium Era..............................................................................59 Canterbury Gets a Card Club.........................................................................................59 Casinos and Racinos Come to the Fore .........................................................................61 The Mega-Casino Emerges............................................................................................63 Upheaval at the Lottery..................................................................................................66 The Compacts Back in the Spotlight .............................................................................69 The Legislative Auditor Again Reviews Gambling ......................................................74 The Internet, Telecommunications, and the Future of Gambling..................................75 Conclusion: A Persistent Ambivalence .....................................................................................78 Endnotes........................................................................................................................................82 Index..............................................................................................................................................93 House Research Department March 2005 Gambling in Minnesota Page 1 Gambling in Minnesota 1945-2005: Timeline Charitable Gambling Horse Racing State Lottery Tribal Casinos Other 1945 Bingo legalized for first time 1947 Gov. Youngdahl’s anti-slot machine law enacted 1963 Bingo law amended to limit compensation to workers 1964 New Hampshire creates first modern state lottery 1967 New York becomes first large lottery state 1971 Bill to legalize pari- mutuel betting reaches floor of both houses for first time 1972 First lottery bill introduced in Minnesota 1976 Bingo law amended to require local licensing, regulate use of profits 1978 Paddlewheels, Bill for constitutional tipboards, raffles amendment to allow legalized pari-mutuel betting nearly passes House 1981 Pull-tabs legalized U.S. Court of Appeals says tribes may conduct bingo on Indian land without state regulation; bingo parlors appear on Indian reservations in Minnesota 1982 Legislature passes More bingo parlors bill to put pari- open on Indian land, mutuel betting including amendment on the Mdewakanton Sioux ballot; voters near Prior Lake and approve in Prairie Island near November Red Wing House Research Department March 2005 Gambling in Minnesota Page 2 Charitable Gambling Horse Racing State Lottery Tribal Casinos Other 1983 Legislature approves pari-mutuel enabling legislation and creates Minnesota Racing Commission 1984 Legislature Legislature legalizes transfers possession of “video regulation and games of chance” licensing from (video poker, etc.) local governments but not gambling on to Charitable them Gambling Control Board; gambling tax enacted 1985 Deadline for Canterbury Downs Bill to legalize exchanging local opens in Shakopee casino in Ely rejected licenses for state for first season of licenses extended racing after gambling board is swamped with applications 1986 Pull-tab tax Canterbury Downs Fond du Luth bingo becomes tax on total wagering peaks parlor opens in ideal gross at $134 million downtown Duluth Video gaming machines begin to appear in tribal casinos 1987 Local governments Canterbury Downs U.S. Supreme Court allowed to tax shows signs of rules in Cabazon charitable financial strain and decision that tribes gambling requires new could conduct any infusion of cash; gambling form that a owners state permits, without unsuccessfully seek state regulation tax relief from legislature 1988 Gross receipts Canterbury Downs Legislature puts state Congress passes approach $500 given significant tax lottery amendment Indian Gaming million; most relief as tax basis on ballot; legislation Regulatory Act gambling board shifts from total dedicates half of affirming legal basis functions shifted to wagering to total revenue to for gaming on tribal Administration takeout; mandated environmental trust land; authorizes Department share of takeout fund, half to Greater tribal-state compacts dedicated to purses Minnesota Corp. for casino-style increased gambling Voters approve amendment in November House Research Department March 2005 Gambling in Minnesota Page 3 Charitable Gambling Horse Racing State Lottery Tribal Casinos Other 1989 Gross receipts Out-of-season Lottery legislation State signs compacts Legislature creates exceed $1 billion; simulcasting enacted with lottery with 7 tribes for Department of gambling board legalized; track as division of video gambling Gaming with becomes agency of ownership files for Department of commissioner sitting Department of bankruptcy; track put Gaming; lottery put on gambling and Gaming; up for sale under supervision of lottery boards and newspaper articles lottery director with racing commission raise questions advisory board Legislature increases about uses of George Andersen penalties for gambling named first lottery gambling on video proceeds; 13- director games of chance member board replaced by 6- member board plus gaming commissioner; combined receipts tax imposed on pull-tab
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