Nation & World

States rush for chance to cash in on sports betting

Iowa among roughly 20 states preparing for Supreme Court ruling

NFL Football - Philadelphia Eagles v New England Patriots - Super Bowl LII - U.S. Bank Stadium, Minneapolis, Minnesota, U.S. - February 4, 2018. New England Patriots' Tom Brady before the game. REUTERS/Chris Wattie
NFL Football - Philadelphia Eagles v New England Patriots - Super Bowl LII - U.S. Bank Stadium, Minneapolis, Minnesota, U.S. - February 4, 2018. New England Patriots' Tom Brady before the game. REUTERS/Chris Wattie

WASHINGTON — Lawmakers across the country — including some in Iowa — are moving to legalize sports betting, wagering that the U.S. Supreme Court will allow it by session’s end and set off a race among states to cash in on contests ranging from regular-season college hoops to the Super Bowl.

The U.S. Supreme Court is expected to rule on Christie v. NCAA, which could invalidate the 1992 Professional and Amateur Sports Protection Act, Under that law, only four states — Nevada, Montana, Delaware and Oregon — now are allowed to facilitate sports gambling.

New Jersey argues the law violates the 10th Amendment, which says that any powers not granted to the federal government fall to the states. And court-watchers think a majority of justices seemed inclined to agree, based on their statements during oral arguments in December.

Sports betting bills have been filed in some 20 states, ranging from ones detailing exactly how the sports betting would work, to mere placeholders that would allow for specific language once the case is decided.

In Iowa, House Study Bill 592, proposed by Rep. Ken Rizer, R-Marion, falls somewhere in between, outlining how sports betting would be handled but leaving some regulatory details to the state Racing and Gaming Commission should the court decide in favor of states.

Under HSB 592, the gaming commission could authorize licensed casinos to conduct advance deposit sports betting. Bets could be placed in person at a casino or by telephone of other electronic means.

Rizer has encouraged a subcommittee chaired by Rep. Jake Highfill, R-Johnston, to “create a bill with the highest possible chance of passing.”

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The main driver of all these bills across the country, of course, is revenue. In states where lotteries, casinos and horse racing already are legal, proponents see sports betting as an extension of their wagering reach and a way to cash in.

Opponents object on moral grounds, or argue that gambling in general is regressive — that the poor suffer disproportionately from gambling losses, and that it leads to addictions that stress state resources by increasing health care and criminal justice costs.

The NCAA, which runs the nation’s massive college sports system, opposes both legal and illegal sports wagering, saying in a statement it “has the potential to undermine the integrity of sports contests and jeopardizes the welfare of student-athletes and the intercollegiate athletics community.”

Former Cedar Rapids Mayor Ron Corbett, a Republican candidate for governor, last month released results of his own online poll, which he said found 70 percent of Iowans favor sports betting. He cites independent projections suggesting the state could collect about $13 million annually from a casino-run approach or about $24 million if sports betting were overseen by the Iowa Lottery.

Legal gambling of all types in 2015 brought in $27.7 billion to local and state governments, according to estimates by the Rockefeller Institute of Government, part of the State University of New York System.

A 2017 study by Oxford Economics, done for the industry group American Gaming Association, estimated that sports betting alone could become a $41.2 billion industry.

Many lawmakers are concerned that if they don’t get into the sports betting market quickly, gamblers will flow to nearby states and leave theirs behind.

“If we are prepared, it will boost our state’s economy. And if we’re not prepared, and the border states are, we’ll take a hit,” said state Sen. Mike Maroney, a West Virginia Republican who authored sports betting legislation there.

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Many lawmakers are looking to Nevada, where last year a legal $138.5 million was wagered on the Super Bowl alone.

But the legal betting market is nothing compared with the potential money now changing hands through illegal wagering. The American Gaming Association, a trade research group, estimated that Americans bet $4.7 billion on last year’s Super Bowl, an 11 percent jump over 2016.

According to the association, 97 percent of the bets were illegal.

Maroney said his state’s economy relies on legal gambling revenue from casinos, horse tracks and video lottery machines. “I don’t want to draw the line in the sand and say we are allowed this kind of gambling and not the other kind of gambling,” he said, adding that nearby states of Pennsylvania and Ohio are “ready to roll. If New Jersey wins (in court) it’s going to happen.”

Pennsylvania and Connecticut enacted sports betting laws late last year and are poised to get into that market if the Supreme Court allows it. Ohio, which legalized fantasy sports betting last year, is also likely to act.

Border-state poaching of gamblers already is at work throughout the country.

New Jersey casinos took a hit when Maryland and Pennsylvania built more in-state gambling parlors. Recently, Mississippi reported that casino revenue fell in 2017 due mostly to declines in riverboat gambling-sites along the Mississippi River, as many gamblers went to racetrack casinos in Arkansas, across the water.

In most states, gambling is a relatively small revenue source: It represents less than 2.5 percent of most states’ revenue, according to data from the Rockefeller Institute.

Lucy Dadayan, who studies gambling for the Rockefeller Institute, said states should view sports gambling revenue with caution.

She predicts a boon in the early stages of a legal industry, but then a decline later.

And looking at Nevada as an example, she noted that “tax revenues generated from sports betting won’t be substantial and shouldn’t be viewed as budget savers.”

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Stateline is an initiate of the Pew Charitable Trusts and is provided by Reuters.

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