Reflecting on sports gambling in Iowa, two years later

Iowa’s legislative philosophy largely empowers Iowans to make their own decisions in areas other states heavily regulate. We have drive-through liquor stores, cocktail pick up from bars, wine and beer delivery and it’s possible to buy any type of alcoholic beverage at your local gas station.

Compared to other states, Iowa is the ungoverned wild (mid)west. Legalizing sports gambling in 2019 with a two-year monitored rollout follows the precedent of trusting Iowans to make their own decisions and leveraging new tax revenue opportunities for the state without increasing taxes on citizens. Perhaps the only exceptions to this genre of law is that smoking indoors was banned in 2005, recreational marijuana and other drugs will likely remain illegal for the near future and no legislator will touch legalizing sex work with a 10-foot pole.

The pandemic was brutally hard on casinos, with Gov. Kim Reynolds ordering them to close their doors in March 2020. However according to the Iowa Racing and Gaming Commission’s report to the governor, “One bright spot in 2020 was sports wagering”

For industry stakeholders, sports wagering revenue more than doubled from 2019 to 2020, with an increase from $19.3 million to $41.6 million. In 2020, $249.8 million in tax revenue went to cities, counties and the state. Sports betting made up just $2.9 million of that sum but had record-setting growth months during fall and winter 2020. It’s also worth mentioning that there are 6,237 people employed in the sector.

Iowa has a long history of gambling toleration. Compared to the rest of the Midwest, Iowa has perhaps the more permissive gambling laws. We were even one of the early states to legalize casinos along with Nevada, New Jersey and South Dakota and the first state to legalize riverboat casinos. This first step towards larger gambling permissions was likely due to our bordering the Mississippi River where casinos on riverboats could dock throughout the 1800 and 1900s.

More recently, the state legalized horse and dog racing in 1983, while 1985 saw the birth of the state lottery.

In May 2019, sports wagering was made legal, and retail and online betting operations started in August 2019. There were some limitations to sports betting initially. For the first 18 months after legalization, bettors needed to physically travel to a state-licensed casino to establish an account in person before playing remotely on an app. This inconvenience likely slowed the first year rollout. Now, Iowans of age can set up an account anywhere.

Making at-home gambling more accessible has costs as well as benefits. Illegal gaming runs rampant in America, the “call my bookie,” trope is a popular topic on TikTok and television shows allude to how common illegal gambling is. According to the 2020 survey of American Sports Bettors, 52 percent of past-year bettors participated in the illegal market in 2019, while 55 percent of consumers who placed most of their wagers with illegal operators reported that they believed they were betting legally.

Legalizing betting, especially sports betting, is a way to bring betting from the shadows into the legal market and for the state to make a profit and to give the bettor and booker much needed legal protection. Gambling is an addiction and this addiction can now be accessed through apps instantaneously, making it more difficult for addicts to remove themselves from the situation. However, considering how much of the gambling market was done illegally, having an app is only slightly more convenient than shooting a text or making a phone call.

Iowa has one of the healthiest state budget practices in the nation and our government smartly capitalizes on new tax revenue opportunities when they arise instead of outright increasing income or businesses. Reflecting on the reality that gambling will happen regardless of legal permissions was the right decision to make in 2019 and it follows our pragmatic track record, pun intended, with the industry.

Patricia Patnode is a Gazette editorial fellow. Comments: patricia.patnode@thegazette.com