Covid-19 Pandemic Boosts Minnesota’s ‘Sin Taxes’

The Covid-19 pandemic has disrupted the lives of people as never seen before and has caused them to use increasing amounts of alcohol and tobacco to alleviate stress. On the other hand, social distancing measures might prompt the legalizing of alternative entertainment activities, such as online sports betting.

Lockdown Prompts Alcohol and Tobacco Usage

The first case of Covid-19 on 1 March in Minnesota and the state of emergency declared two weeks later caused practically all non-essential activity to stop, left businesses closed, and forced people to stay home for a long period of time. Casino reopenings began only in May, along with other non-essential businesses.

Quarantine and social isolation have prompted the increase in the consumption of substances, such as alcohol and tobacco as stress relieves. People were also looking for new forms of entertainment, which boosted video streaming, communication platforms and caused some Minnesotans to substitute casinos for lottery and pull-tabs.

As a result, Minnesota’s revenue from “sin taxes” went $37 million above the amount predicted for the period July – September, figures from the Department of Management and Budget show.

While the pandemic has taken a toll on businesses and has slashed the income of families leaving the state with a projected deficit of $2.3 billion over the two-year budget cycle, other industries have come out as winners. The revenue from tobacco was $20 million more than projected, and gambling taxes from activities like pull-tabs and bingo were twice more than anticipated.

Brian Sigritz, who is director of state fiscal studies for the National Association of State Budget Officers, said sin taxes could increase in more states, and lawmakers might go even further by legalizing sports betting and recreational marijuana.

Currently, it is illegal to place a bet with a bookmaker in Minnesota, although discussions on the topic are already taking place in the state. Meanwhile, Minnesota’s actual consumers of ‘sin products’ remain unknown, but the state is looking into its problem gamblers as part of new research.

When Will Sports Betting Be Allowed in Minnesota?

The SF 1894 is the latest bill that tackles the issue proposing to make sports wagering legal in case it is conducted by a licensed sports pool operator. The bill also establishes taxes for this type of betting activity.

However, the Native American population has taken a stance against the proposal since it would diminish in-person revenue, as explained by the Minnesota Indian Gaming Association (MIGA). There is a possibility, though, that in the current context of social distancing and no end of the health crisis in sight, sports betting might become a reasonable alternative.

Who Will Regulate the Activity?

The SF 1894 also proposes the creation of The Minnesota Sports Wagering Commission that would act as a regulatory body for legalised sports betting. The commission would consist of five members appointed by the governor and will be given the power and duties to ensure a lawful and fair play.