Minnesota lawmaker introduces bill to legalise advanced deposit wagering

A Minnesota Senator has introduced new legislation to legalise advanced deposit wagering (ADW) in the state, allowing it boost funding for its horse racing industry and channel players towards a legal offering.

Senator Dan Sparks’ SF2835 aims to amend Chapter 240 of the Minnesota Statutes to give the Minnesota Racing Commission the power to licence and regulate ADW companies in the state. The bill was introduced last month and has now been referred to the Senate Finance Committee.

The bill looks to ensure ADW providers allocate a fair share of revenue to the state’s horse racing and breeding industries, as well as providing a level of consumer protection to Minnesota residents that bet with these companies.

“Due to the non-regulation of advance deposit wagering companies, Minnesota's horse racing industry has lost revenue as Minnesota residents are increasingly drawn to these wagering platforms for their convenience and their ability to offer attractive promotions and rebates, mostly from savings derived from not having to provide much needed revenues to the Minnesota Racing Commission and the state's racing industry,” the bill explains.

“As in many states that have licensed and regulated advance deposit wagering companies, enacting this legislation will allow Minnesota's racing industry to recapture lost revenues derived from wagering currently being conducted by Minnesota residents and ensure such wagering benefits Minnesota's racing industry.”

This would effectively allow online and phone betting in the state, with advanced deposit wagering allowing customers to place bets via pre-funded accounts.

Companies can apply for a Class C licence to provide ADW on horse racing for a fee of $10,000 per year, with licensees required to pay a $1m bond to the state of Minnesota to ensure payment of all fees such as source market fees, regulatory fees and breeders fund fees.

Applicants must also set out a plan of operation for conducting ADW in the state, including dispute resolution methods, procedures to verify account holders’ identities, and annually contracting a third party to conduct an audit, with its results to be submitted to the Minnesota Racing Commission.

To ensure the state’s horse racing industry is funded by the new form of betting, operators will be required to pay source fees to licensed racetracks. These fees will be set by contract or by the Racing Commission and are in addition to other fees.

Of the sum, 28 per cent will be given to a licensed racetrack that primarily conducts standardbred horse racing, with 72 per cent going to tracks that conduct thoroughbred and quarter horse racing.

ADW providers must also pay a regulatory fee at a rate of 1 per cent of all amounts wagered, with a further sum of one quarter of 1 per cent of all amounts wagered to be imposed as a breeders fund fee. Taxes of 6 per cent on all revenue over $12m generated through ADW will also be enforced.

Any violation of the legislation will see companies fined or have their licences revoked, though operators are given leave to appeal against fines over $5,000.

Should the legislation pass into law it will come into force from July 1st.


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