The Minnesota Senate Finance Committee held an informational hearing on Wednesday to discuss the economic impact and social harms of regulated online sports betting.
The hearing, led by Sen. John Marty who is also Chair of the committee, covered various topics and concerns regarding the popularity of sports betting including illegal gambling operations, VIP programs, responsible gaming, gambling disorders and economic impact.
Wednesday’s hearing began with several testifiers raising concerns about the risks associated with regulated online wagering and how operators prey on sports fans.
“Commercialized gambling is a financial exchange that is mathematically stacked against you,” Stop Predatory Gambling National Director Les Bernal told hearing attendees. “They wrap it up as if it’s entertainment but at its core, it’s a financial exchange.”
VIP hosts raise concerns
Those who attended the meeting in person or virtually were also provided with testimony regarding the VIP programs that are offered nationwide by online sports betting operators.
“I receive about 10 to 15 emails and calls a week from addictive gamblers and their families and almost every single one of them had a VIP host who led them to dire straits,” said Matt Litt, a litigator for victims of sports betting, during Wednesday’s hearing.
Litt detailed how operators use algorithms to acquire new VIP customers using data based on their deposits exceeding a certain unspecified amount. The litigator voiced his concerns about the relationships VIP hosts build with their customers by providing bonus bets and access to exclusive events and experiences giving players incentive to keep gambling.
The incentive is also bolstered with players being provided with rewards after losses even with some VIP members requesting free bonus bets from hosts to keep wagering.
“They know [VIP hosts] perfectly well that what they’re seeing is the sign of problem gambling,” continued Litt.
Litt also raised the recent gambling-related issues the Jacksonville Jaguars are facing after a former employee embezzled more than $20 million from the team to gamble. The former financier, Amit Patel, was given more than $1 million in credits from a VIP host.
Patel, who is serving a 78-month prison sentence for his actions, also used the embezzled money to take lavish vacations and purchase luxury gifts, including a $95,000 watch.
Economic impact of sports betting
Professor Brett Hollenbeck from the UCLA Anderson School and Professor Scott Baker from the Kellogg School at Northwestern University provided insights into how online betting has impacted regulated markets and their citizens from an economic perspective.
The two educators provided data on how regulated sports betting has impacted credit card debt and the frequency and amount of loans for active bettors in regulated markets. Baker and Hollenbeck’s data also takes into consideration how credit card companies operate.
“There’s nothing about credit bureau data that allows us to identify which individuals in the data are actually participating in gambling,” said Hollenbeck. “So, we are looking at the average for the full population in states with gambling versus states that do not have it.”
Experts during the hearing also discussed data regarding domestic violence and gambling.
Failed efforts in Minnesota
Last year, Marty introduced Senate Bill 5330, a bill that proposed the authorization of online wagering in Minnesota with up to 11 wagering licenses up for grabs to operators.
SB 5330 was referred to the State and Local Government and Veterans Committee where it failed to progress. Marty has voiced his plans to refile a bill this legislative session.
Rep. Zack Stephenson also made an effort to legalize sports betting in 2024 by introducing House Bill 2000, which was approved by the Minnesota House Taxes Committee. It was then referred to the Ways and Means Committee where it died after amendments.
