Government

First year of Iowa sports betting gains yards, but not touchdown

Pandemic proves continuing wild card with sports events up in the air

Bettendorf Mayor Bob Gallagher approaches the counter to place the ceremonial first bet on Aug. 15, 2019, at the Isle Ca
Bettendorf Mayor Bob Gallagher approaches the counter to place the ceremonial first bet on Aug. 15, 2019, at the Isle Casino in Bettendorf. William Hill Sports Book opened for business at the casino and accepted the first legal sports bets from the mayor shortly after noon to mark the first day of legal sports wagering in the state. (Quad-City Times)

DES MOINES — While not an MVP season, sports betting in Iowa is getting good marks for a hit-and-miss rookie year.

Iowans who took advantage of a new law that allowed them beginning legally betting on professional and collegiate sporting events a year ago — Aug. 15, 2019 — wagered more than $400 million in the first year — a new gambling opportunity that provided a roughly $30 million shot in the arm to 19 state-licensed casinos that were rocked by a coronavirus pandemic that closed them for 11 weeks and brought athletic competition at all levels to a halt.

Casino operators were delighted when legalized sports betting broke strong from the gates with revenue and attendance climbing in the first six months of the fiscal year. But then it crumpled down the stretch when Gov. Kim Reynolds ordered gambling parlors and many other businesses closed last March to slow the spread of COVID-19.

The pandemic also forced the cancellation of major sports when college basketball and other betting attractions were in full swing and Iowa’s casinos saw their net proceeds sliced by about 20 percent to post their lowest revenue totals since fiscal 2006 and attendance numbers the lowest since 1996.

“It’s difficult to gauge what expectations could or should have been when we had an unprecedented year like we had,” said Wes Ehrecke, spokesman for the Iowa Gaming Association, an umbrella group for the state-licensed casinos.

Brian Ohorilko, administrator for the Iowa Racing and Gaming Commission, said it is difficult to gauge Iowa’s first year of legalized sports wagering, given the erratic nature of the coronavirus-riddled business model. But overall he believed Iowa’s casino operators were pleased with how the added amenity performed.

“Going into this, nobody was too sure of this. We had seen what was happening in other states like New Jersey and Nevada and this was back last year when the Legislature was contemplating whether or not to offer sports wagering,” Ohorilko noted. “I think most of the operators were happy. I don’t think anyone who was close to the industry expected significant numbers. I think the goal all along was to have another profit center that was popular to customers and maybe would attract some new customers.”

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Legislative fiscal experts had projected sports wagering would generate up to $1.8 million in state tax revenue and possibly up to nearly $560 million in wagering activity. The state’s take came in pretty close to that mark, while betting activity that was near a $60 million monthly pace suddenly went from $327 million to zero in March.

“It was very unfortunate that just when it was hitting its stride and coming off the football season and ready for March Madness and the conference tournaments and everything got shut down,” Ehrecke said. “There wasn’t any sports to wager on — professional or collegiate in the U.S. or the U.K. because of the coronavirus.”

It wasn’t only the coronavirus that held back Iowa’s opening year, according to Max Bichsel, an executive with Gambling.com Group.

He said the requirement in Iowa law that sports bettors for the first 18 months must physically travel to a state-licensed casino to establish an account in person contributed to a “subpar” first year and muffled participation, especially for Iowans who live in rural areas that are not close to an urban gambling enterprise.

After that in-person visit, gamblers can place bets online with a an app for the casino.

The ”obstacle of in-person registration” creating some “friction” for customers will remain until Jan. 1, when the requirement ends and Iowans aged 21 or older who prove residency can establish an account online. Bichsel believes that may double Iowa’s wagering numbers.

“I think the prospects for 2021 is that things should open up fairly significantly. You’ll have more operators enter the market in Iowa and for customers it will be easier for them to wager on sports just because they won’t have to go to a casino to register. In some cases, that’s quite a task,” he said. “I think you’ll see some positive momentum going into Iowa for 2021.”

Ohorilko said online sports wagering topped retail bets placed in person at casinos by about $100 million — especially when virus concerns made remote wagering the preferred option.

The state gaming administrator said at least eight new sportsbook companies have applied to be licensed to operate in Iowa as the Jan. 1 registration change approaches. Casinos will be able to have up to two individually branded websites per location, with the commission authorized to go to three if they so choose. That will allow gamblers to shop around and download different apps and compare sportsbook odds.

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As it currently stands, he said, he has heard of gamblers driving from Des Moines to the casino in Jefferson or other locations to be able to access internet sites that offer fantasy sports or other options not available to them locally.

State Sen. Roby Smith, R-Davenport, who played a key role in getting the sports wagering legislation passed and signed into law by Reynolds, said the first year went as well as could be expected, given the COVID-19 disruptions, and was pleased no major compliance issues or other concerns emerged with the state’s latest gambling expansion.

“I think probably the biggest surprise was a little bit more online usage than most thought would happen,” he said.

Despite criticism, Smith said he believed “it was the right thing to do” to require the in-person registration for the first 18 months as a security precaution for a new gambling option.

“I think it’s an unfortunate time as far as we don’t have an accurate reading on what the demand will be because you don’t have the normal level of sports out there. But you also don’t have to have people that have to go inside a casino if they don’t want to. They have the online option to place their wagers and I think there’s some safety measures in that, too,” he said. “I think there’s good and bad for the year 2020 in dealing with online sports wagering.”

Fiscal 2021 is not starting out great for sports wagering in Iowa, with the Big Ten canceling fall football and uncertainty swirling around professional teams.

“I think the word ‘unprecedented’ gets overused significantly, but COVID is severely an unprecedented event, a true black swan event especially in this country. Specific to sports, obviously it shut everything down. We missed March Madness, we missed some major golf tournaments, the playoffs for the MLB, for the NHL, for the NBA, they’re going to happen but in a different capacity with limited games,” Bichsel noted.

“While it wasn’t a complete year to compare to with all of the COVID events,” Ehrecke said of Iowa’s first year of legalized sports betting, “still it’s getting itself established and it will continue to improve once we get beyond this pandemic and we can get sports back to what may be a new phase of normal.”

Comments: (515) 243-7220; rod.boshart@thegazette.com

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