Government

Sports betting in Iowa inevitable, experts say

Congress could open the door if the U.S. Supreme Court does not

(File photo) Philadelphia Eagles' Nick Foles celebrates with the Vince Lombardi Trophy after winning Super Bowl LII. The Super Bowl is a popular event for sports betting, with $4.7 billion wagered on the 2017 Super Bowl. It is estimated that 97 percent of that was illegal. REUTERS/Kevin Lamarque
(File photo) Philadelphia Eagles' Nick Foles celebrates with the Vince Lombardi Trophy after winning Super Bowl LII. The Super Bowl is a popular event for sports betting, with $4.7 billion wagered on the 2017 Super Bowl. It is estimated that 97 percent of that was illegal. REUTERS/Kevin Lamarque
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ALTOONA — Were they betting people — and some sure sounded like they were — state and national experts appear ready to wager that sports gambling will be legal in many states, possibly including Iowa, in the near future.

The U.S. Supreme Court is considering a case that could open that door. Proposals to make sports wagering legal, pending that court decision, have been introduced in 18 states, including Iowa. Two states have passed the anticipatory measures.

“Sports betting is coming. It’s going to be here,” said Will Green of the American Gaming Association. “It’s a matter of when — not if.”

“People understand this is happening, and having a well-regulated market is the way to do it."

- Jake Highfill

Iowa State Representative, R-Johnston

Green’s organization has a vested interest in the legalization of sports betting: the association promotes and lobbies on behalf of the gaming industry, including casinos that could profit off legalized sports wagering.

Green’s opinion was shared by other state and national experts who spoke at a recent event at Prairie Meadows Casino and Hotel in Altoona. The event, which featured a keynote address from a national professional sports expert and multiple panel discussions, was hosted by the Drake University Law School.

Legal sports betting may be on the way regardless of the Supreme Court ruling, some of the experts said.

“It’s coming, whether it’s state-by-state or whether it’s some Congressional act. Because there’s a societal move toward it, as there has been toward marijuana, as a good example,” said keynote speaker Andrew Brandt, who in the past was an agent for professional athletes and member of the Green Bay Packers front office. Brandt is now a columnist for the Sports Illustrated website and director of Villanova Law School’s sports law center.

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“And I think people realize the revenues, most importantly, we have a huge illegal market,” Brandt added.

Americans illegally wager an estimated $150 billion annually on U.S. sports. Of the $4.7 billion wagered on the 2017 Super Bowl, for example, 97 percent was illegal, according to estimates from the American Gaming Association.

More than 2 in 5 adults said they would place at least one bet per year in a legal and regulated environment, according to a survey of 1,000 people in five states: Iowa, Indiana, Oklahoma, Arizona and California, conducted by the Innovation Group, which conducts market research for the gaming industry.

Currently, betting on sports is legal only in Nevada, with a few limited exceptions. The pending Supreme Court ruling — which is expected this spring or summer — could clear the way for other states to legalize it, should they choose.

 

Advocates say Americans are illegally gambling anyway, so it would be better to legalize, regulate and tax it.

“People understand this is happening, and having a well-regulated market is the way to do it,” said Jake Highfill, a lawmaker who is guiding a proposal, House File 2448, through the Iowa Legislature.

As the event moderator noted, the same argument — people are doing it anyway — has been made regarding other forms of gambling, like internet poker and daily fantasy sports — and marijuana use, to use Brandt’s example — and those things remain illegal in Iowa.

Wes Ehrecke, president and chief executive of the Iowa Gaming Association, said he thinks more education and a shift in attitudes toward gambling make it possible in Iowa.

“A lot of education still has to take place for people to understand,” Ehrecke said. “We’re more optimistic on this because it was really a game-changer when the Supreme Court decided to hear the case.”

The proposed legislation in Iowa would place sports betting under the direction of the state’s casinos, and the activity would be regulated by the state’s Racing and Gaming Commission.

Bettors could wager on professional and college athletics. Properties that wish to host sports betting would be required to pay a $25,000 license fee, and a tax of 8 percent on sports betting revenue would be applied.

Legal sports betting would generate $80 to $90 million in new, annual tax revenue for the state of Iowa, according to the Innovation Group’s survey. While that is a significant amount of money, it would represent a relatively small drop in the state’s annual $7 billion-plus budget.

The proposed legislation also would legalize mobile sports betting. Highfill said without that provision to entice younger bettors, the proposal is “not worth it.”

Experts said sports gambling is not a huge moneymaker for casinos, in part because of the uncontrolled nature of the gambling. Slot machines and table games, for example, pay out over the long term at a mathematically consistent rate. But unexpected events and other uncontrollable factors make sports gambling more volatile.

However, experts added, legalized sports gambling likely would add foot traffic to Iowa casinos, including the potential for many people who do not currently visit and gamble in them.

The professional sports leagues have, in the past, been vehemently opposed to expansion of sports betting. But some of the leagues have warmed to the concept and are working with the gaming industry on the proposed legislation in some states.

Two pro sports leagues have criticized the Iowa proposal for its lack of safeguards.

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“We agree that time has come to give fans a safe and legal way to bet on sports. But any law authorizing betting must include rigorous protections to safeguard the integrity of our games,” Mike Bass, the NBA’s executive vice president of communications, said in a statement. “The bill rapidly advancing through the Iowa Legislature is deeply flawed and will not achieve that critical goal. It lacks the most basic requirements for strict regulation of sports betting.”

Major League Baseball issued a similar statement expressing its concerns.

“The legislation quickly advancing in Iowa would create incredibly weak and insufficient oversight of sports betting, and would not sufficiently mitigate the potential risks to our game that will emerge from legalized sports betting,” the MLB statement said. “The steps for strong regulation have been studied and proven to be effective for years in betting markets overseas, but this bill does not even come close to mandating the necessary precautions.”

The leagues have pushed for provisions that would allow them to veto some specific forms of wagering, and for an “integrity fee” they say is needed to insure them against a potential betting scandal that could hurt the leagues.

Highfill called the integrity fee a “non-starter” in the Iowa legislation and criticized the pro sports leagues, which makes billions of dollars in revenue, for asking for yet more money.

Highfill said the Iowa proposal has more bipartisan support among lawmakers than any gambling bill he has worked on during his six years in the Legislature.

On the official state list of registered lobbyists, the casinos support the bill and the NBA and MLB are joined by the Iowa Catholic Conference and Iowa Behavioral Health Association in opposition.

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