2019 LEGISLATIVE SESSION

Sports gambling will get hearing at Iowa Capitol

Lawmakers will debate whether to allow it and, if so, where

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Nick "1ucror" Dunham speaks in front of a spreadsheet at the DFS Players Conference about "The Process of a Top Cash Game Player" in daily fantasy sports betting in New York November 13, 2015. REUTERS/Lucas Jackson - RTS6UDD
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DES MOINES — It’s a sure bet sports wagering will be debated this year in the Iowa Capitol.

Statehouse leaders say they expect robust discussions about legalizing sports gambling now that the U.S. Supreme Court has cleared the way.

“I know we’re going to discuss it a whole lot. I will bet on that,” said House Speaker Linda Upmeyer, R-Clear Lake.

Besides debate over whether to allow it at all and, if so, how much of a cut the state should get, lawmakers also likely will discuss what form it would take — allowed only at state casinos, or online and at lottery retail outlets also?

In May, a Supreme Court ruling allowed states to legalize gambling on professional and college sports if they choose. Previously, only Nevada had widespread sports gambling and a few other states allowed only limited legalized sports gambling.

Since then, seven states have legalized sports betting and 23 more — including Iowa — have introduced legislation, according to an ESPN report tracking the national activity.

During the last session of the Iowa Legislature, lawmakers introduced a measure suggested by the Iowa Gaming Association, which represents the state’s casinos.

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That bill would have made betting on professional and collegiate sports legal in Iowa’s casinos and online, and charged the state’s Racing and Gaming Commission with regulation. The proposal included a $25,000 licensing fee and a tax on sports betting revenue — the bill called for a 17 percent tax, while the gaming association suggested a 6.75 percent tax.

It did not pass, in large part because lawmakers wanted to wait for the Supreme Court ruling to affirm sports betting.

With that obstacle cleared, legislators expect more discussion in this legislative session, which begins Monday.

“We’re going to have a very thorough conversation about that,” said Senate Majority Leader Jack Whitver, R-Ankeny and a former Iowa State University football player. His alma mater could be included in legislation allowing sports betting. “Now that the Supreme Court has ruled and it’s an option, we’re going to have a very thorough conversation about that and see where that goes.”

Opponents of legalized sports betting mostly cite a moral opposition to gambling. Advocates note people already gamble on sports in places where it’s illegal. They want to legalize, regulate and tax the practice.

Americans illegally wager an estimated $150 billion on U.S. sports annually. 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.

“I think society has changed in the last 15 years since I played. I think there’s a lot more people in the sports betting world. You turn on ESPN or any talk radio, they’re talking about spreads every day,” Whitver said. “I think that it’s happening right now. There are illegal bookies all over this state and all over this country. There are offshore accounts that are taking bets every day. So the possibility of corruption happening is already there. So the question we have to answer is, is it better for us to take control of that, regulate it, keep a better eye on it and take it out of the black market?”

House Minority Leader Todd Prichard, the D-Charles City, said sports gambling’s future in Iowa could depend upon whether the industry’s key interests — namely the casinos and sports leagues — can agree on a regulatory framework.

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One hitch in the previous proposal was that the sports leagues pushed for an “integrity fee” on sports betting, which would go to the leagues. The proposed legislation ultimately did not include such a fee.

“I think it will depend a lot on what the system in Iowa looks like,” Prichard said. “There will have to be some agreement between a lot of stakeholders in the industry. It’s possible there could be a deadlock that prevents it from going forward.”

Keith Miller, a Drake University Law School professor with experience in gaming laws, said legislators will have to come to grips with the fact that sports betting would not produce a significant amount of revenue for the state.

He said the benefits are more tangential: legalized sports betting could bring more people into casinos, which could lead to more spending on other games and in restaurants.

“They won’t be able to make money off it. This has to be viewed as an amenity at these (casinos),” Miller said.

Miller also said it will be worth watching the Iowa Lottery’s role in any proposal.

In some states, the state lottery has wanted to be involved in sports gambling by including it in retail lottery locations like convenience stores.

Some lawmakers could view that as “the camel’s nose under the tent,” Miller said.

“If the lottery presses this, it will present an interesting debate on whether or not there’s room for both entities in sports betting, and if so how that would be done,” Miller said. “I think that will be one of the really interesting dynamics.”

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