The final countdown for legal sports wagering in Iowa is officially on.
The Iowa Racing and Gaming Commission approved the final rules for the state’s initial run at taking bets at a special meeting Tuesday in West Des Moines. Included in those rules is the big date to circle on your calendars: Aug. 15 at noon.
That’s when the lid comes off for placing bets on professional, college and certain fantasy sports contests.
“There’s an excitement, just that kind of vibe,” said Wes Ehrecke, president and CEO of the Iowa Gaming Association. “We have another entertainment option to enjoy watching sports by betting on them, and we can let players do that in retail and mobile environments.”
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Brick-and-mortar sportsbooks either already are or will soon be in place at 18 of Iowa’s 19 licensed casinos, with only the Casino Queen in Marquette abstaining for now. Of those 18, at least 15 are expected to have mobile-based arms of their sports betting operations, according to gaming commission administrator Brian Ohorilko.
Not every casino will be taking bets immediately following the start date, depending on each location’s readiness to provide the service. The two primary target times are Aug. 24, for the start of college football season, and the Sept. 5 kickoff for the National Football League.
But Prairie Meadows in Altoona, which is already the state’s hub for horse racing and pari-mutuel wagering, is among the locations that won’t be wasting a minute. The casino has had the foundations of an 8,600-square foot sportsbook in place for months, more or less waiting to be allowed to turn the lights on.
“Whatever the start date was is always what our date was projected to be,” said Brad Rhines, Prairie Meadows’ senior vice president and chief strategic officer. “Day 1, Hour 1 has been our aim.”
Iowa will become the 11th state in the U.S. to offer legal sports wagering to adults 21 and older, the third in 2019 and the first in the Upper Midwest. Ten states have joined Nevada in the sports betting business since a 2018 Supreme Court decision cleared the way for gambling nationwide. Delaware, Mississippi, New Jersey, New Mexico, Pennsylvania, Rhode Island and West Virginia first took bets last year, with Arkansas and New York finalizing their systems earlier in 2019.
Under Iowa law, licensed casinos must pay a $45,000 license fee, with an annual $10,000 renewal, to participate. From there, a 6.75% tax will be imposed on the casinos’ hold, or the house’s share of revenues once wagers are settled. That tax rate is tied with Nevada for the lowest in the country. So-called “integrity fees,” paid to professional leagues who want a percentage of revenues, were not included in the final version of Senate File 617, which was passed in April and signed by Gov. Kim Reynolds in May.
Whether betting on-site or through a mobile app, players must first travel to a casino to prove their age and identity and set up an account with that casino. Iowa law requires in-person registration until Jan. 1, 2021. Mobile apps must be given security and integrity checks before being released to public stores or download sites. Rhines said Prairie Meadows will notify prospective bettors when their app is available and when it is worthwhile for them to register in person. He said he anticipates the app’s release to come a few days before the Aug. 15 opening date.
Casinos can have separate third-party vendors that funnel wagering, so it’s possible for players to have multiple betting options available for a particular game (for example, slight differences between the point spread, the odds and payout for simply betting on a winner, or the types and varieties of in-game proposition bets offered on certain contests). However, until the 18-month introductory period expires, bettors must travel to each individual casino to have those wagering variances available.
In addition, mobile apps will be geofenced, meaning they’ll only be operable within state borders. Residents in Omaha, Nebraska, for example, would have to cross state lines each time they wished to place a bet on their phones.
There are no mandatory mobile player wagering limits in Iowa’s law, other than what might be set by a sportsbook, Ohorilko said. However, mobile apps must provide an “easy and accessible way” for customers to set deposit, wager or time limits.
“Once a player has established a limit, if they wanted to change it, the rules require a waiting period,” he said. The idea, then, is that players who win or lose at an accelerated rate will not be immediately able to make an outsized, impulsive course-correction if they’ve lost wagers or place massive follow-up bets if they’ve found themselves on a hot streak.
Wagers on college and professional sports and certain fantasy contests are legal under Iowa’s bill. In-game propositions are allowed, as long as a sportsbook offers them and they are not tied to teams or individual players competing for or against an Iowa-based school.
Further fantasy options such as daily contests still need to be regulated by the commission, but they could be available for the start of the NFL season. The Iowa bill includes a provision that prohibits daily fantasy games on college sports until May 1, 2020.
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Getting the state ready for legal wagering within three months of a bill’s passage is no small feat, Ehrecke and Rhines agreed. Ohorilko said more than a third of the commission’s staff of about 50 people have been working in recent months on readiness aspects of sports wagering — rule-writing, managing controls, consideration of licenses and the like.
The work involved to be ready for such a quick turn goes back to the Supreme Court decision, however.
“If you were a state commission and were not preparing for (possible legal sports wagering) at that time, then you weren’t doing your job,” he said. “So we were very active. We didn’t know if sports wagering would be approved next year, five years, never. But it was important to be in contact with regulators and other jurisdictions to understand what was working.
“That preparation has helped us tremendously to get it rolled out quickly, but also in the right way.”
Rhines praised the commission’s work and its regular communication with casino operators in order to expedite the process.
“These are people who moved it forward at a quick, efficient pace, and have kept everybody informed and on the same page,” he said. “We have the best set of rules, that make the most sense and are compliant with the law, to make for the best gaming bill in the country. It feels that way and it is that way, relatively free from any controversy or issues.”
Indeed, the effort to legalize sports wagering saw unconventional splits and alliances in the Iowa Legislature, with the measure receiving bipartisan support.
That’s not to say that Iowans are unified in support of sports gambling. A February Des Moines Register/Mediacom Iowa Poll found 52% of Iowans opposed legalizing betting on professional sporting events, and 69% opposed legalizing betting on college sporting events.
Just 4% of poll respondents said they regularly wager on sports events, even informally with friends. Six percent said they occasionally make such bets, and 8% said they rarely gamble on sports. Four out of five Iowans — 80% — said they have not placed informal bets on sports events in the last few years.
But that won’t stop casinos providing the entertainment option or the government from collecting a small slice of revenue. As a comparison, casinos in Mississippi — which lags Iowa’s state population by fewer than 200,000 people — brought in nearly $14.5 million in revenue holdings in the final four months of 2018, according to industry website The Lines.
Hypothetically, a similar revenue mark applied to Iowa’s 6.75% tax rate would account for about $980,000 over those four months.
Ohorilko emphasized that there is no history on which to base revenue projections for sports wagering in Iowa, and said the state does not have a formal revenue estimate. Nevertheless, he said the commission anticipates between 2% to 4% of all casino revenues to come from that sector, based on the behavior of bettors in other states.
Iowa’s licensed casinos took in $1.457 billion in revenue in the previous fiscal year. Using Ohorilko’s baseline, sports wagering would then account for between $29.1 million and $58.3 million in annual revenue, of which the state could collect an estimated $1.97 million to $3.93 million in taxes.
If that number seems small, Ohorilko said that trickle-down revenue into the government’s pockets was never the primary intent of legalizing sports betting.
Rhines said Prairie Meadows simply sees the wagering as another way for fans to engage with a live product, and as another no-brainer entertainment experience a casino should provide.
“I’m excited for people who have wanted to wager on sports here but couldn’t and now have the ability to,” he said. “I’m proud that casino operators are all investing in the experience, not just as a means to an end, but as an actual experience. We are entertainment facilities and destinations, and this gives us another aspect of that experience.”