The battle between over Minnesota sports betting legislation took a contentious turn this week as a horse racing track took legal aim at several tribal casinos.
Running Aces Casino, Hotel & Racetrack announced Tuesday it filed a lawsuit in the US District Court for the District of Minnesota against three Minnesota tribal casinos for violating the federal Racketeer Influenced and Corrupt Organizations Act, or RICO, through illegal card games.
The lawsuit follows a bill introduced this month in the legislature that outlaws historical horse racing (HHR) at the tracks. Rep. Zack Stephenson‘s legislation is based on tribal opposition to a recent Minnesota Racing Commission decision that would allow HHR at the tracks beginning this summer.
These developments come as the horse racing tracks and tribes are at the center of the legislative Minnesota sports betting negotiations. The Minnesota legislative session adjourns May 20.
Basis of Minnesota track lawsuit
Running Aces’s lawsuit claims three casinos have failed to comply with the Indian Gaming Regulatory Act of 1988 by offering card games not covered by their state-tribal gaming compacts. Those games include Three Card Poker and Ultimate Texas Hold’em, according to the release.
The lawsuit claims the Mille Lacs Band of Ojibwe, which operates the Grand Casino Hinkley and Grand Casino Miles Lacs, offers games beyond blackjack, which is the only card game included in its compacts. It also notes the tribe submitted an opposition letter to the governor and Minnesota Racing Commission regarding the track’s desire to expand its “dealer assist” games.
Running Aces also claims Treasure Island Resort & Casino similarly operated outside of its compact until October 2023. At that point, the Prairie Island Indian Community and the state amended their compact to include games other than blackjack.
What Running Aces wants
According to the release, Running Aces seeks treble damages for the harm caused to its business.
It argues the casinos’s alleged illegal activity has offered them unfair competitive advantages costing the track “substantial revenue and profits.”
Running Aces also seeks an injunction against any future illegal activities by the tribes.
Legislative battle moves to court?
The lawsuit comes on the heels of Stephenson’s HF 5274, which he crafted because tribal lawyers argued HHR machines are too close to slot machines, over which tribes have exclusivity in Minnesota through their compacts. During a hearing on the HHR bill last week, Stephenson said HHR would not be included as a bargaining chip in MN sports betting negotiations.
Stephenson is the lead sports betting sponsor and is a member of the Democrat-Farmer-Laborer party, a strong ally of the state’s tribes. The tribes have killed gaming legislation in the past.
The Minnesota Indian Gaming Association spoke in favor of HF 5274 at a hearing Thursday, but did not respond to a request for comment on the lawsuit as of Thursday afternoon. The bill advanced out of the House State and Local Government and Finance Committee Thursday.
Minnesota sports betting at stake?
The lawsuit comes as lawmakers continue to negotiate Minnesota sports betting legislation. While the DFL controls the legislature and favors tribal sports betting exclusivity, internal party opposition requires bipartisan support.
Meanwhile, Republicans are adamant about including the state’s two horse racing tracks in the final law. Throughout the past two sessions, DFL sponsors amended their proposals to send money to the tracks. The tracks, however, remain focused on securing licenses.
The two parties and their allies have failed to reach an agreement in the past two sessions while discussing the issue. Multiple sources tell LSR sports betting lobbyists have no more work left to do in Minnesota, and it is up to the lawmakers, tracks and tribes to come to an agreement.
Strong start to 2024 tapering off
The 2023 proposal carried over into this session, with negotiations taking place over the break. Many stakeholders believed the state was among the best bets to pass legislation heading into the year.
But as lawmakers have worked the bill, issues continue to emerge. At one committee stop, lawmakers amended a Senate bill to prohibit live wagers, a change not supported by industry stakeholders.
However, the tracks, and therefore the Republicans, have remained unhappy with the tribal license exclusivity.
Recently, Sen. John Marty introduced a third DFL sports betting bill. It largely mirrors the original legislation of companion bills HF 2000 and SF 1949, the DFL bills lawmakers have debated over the past two years. However, Marty raised their 20% tax rate to 40% in his bill and left out concessions added for the tracks.
