DES MOINES — Iowa is free to legalize sports gambling thanks to a U.S. Supreme Court ruling delivered Monday.
Some proponents in the state are lamenting a missed opportunity to already have put legalized sports gambling on the fast track in anticipation of such a ruling. It will be January before lawmakers convene again to consider it after demurring in the session that ended earlier this month.
In a long expected ruling, the Supreme Court paved the way for states to legalize sports betting, endorsing New Jersey’s bid to allow such wagering and striking down a 1992 federal law that prohibited it in most places.
Iowa was among 18 states that earlier introduced legislation to allow sports gambling if the court ruled this way, and one key state lawmaker said there was sufficient support for the bill to pass. But the Iowa Legislature just adjourned without adopting it, so sports wagering will remain illegal in Iowa — at least for now.
“The story today is that Iowa is behind the 8-ball, and that is not a good position to be in relative to this market,” said Jeff Danielson, a Democratic state senator from Waterloo and a supporter of sports and fantasy sports betting.
Danielson was among those who urged the Legislature and governor to approve measures during the session so Iowa would be prepared.
“We’re excited to see the U.S. Supreme Court ruled as we expected them to do,” said Wes Ehrecke of the Iowa Gaming Association, which represents the 19 state-licensed casinos that likely would become the hub of sports betting if Iowa adds it to its menu of legal gambling options. “The timing would have been great to have had this done four weeks ago.”
Gov. Kim Reynolds said Monday she did not expect a special session to consider a sports gambling proposal, but that she will work with legislators during the coming months and potentially address it next year.
By that timetable, in all likelihood Iowans would not be able to legally gamble on sporting events until after some of the biggest annual betting events — like the Super Bowl — are over for the year.
Jake Highfill, a Republican legislator from Johnston who oversaw the sports gambling bill during the 2018 session, said he was confident he had bipartisan support to pass the measure and he expects to push the issue early when the Legislature next convenes.
Danielson was less optimistic about the prospects, saying he did not see evidence of broad, bipartisan support and that many legislators are morally opposed.
“Pardon the pun, but we face long odds,” Danielson said. “I think people are allergic to evidence on this issue.”
Iowans also will go to the polls in the meantime to decide 100 House races and 25 Senate races this November, which could make this a lower-tier campaign issue and subject to new legislators in key committee or leadership positions, depending on the outcome of November’s election.
On Monday, justices upheld the legality of a 2014 state law permitting sports betting at New Jersey casinos and horse racetracks and voided the federal Professional and Amateur Sports Protection Act. The ruling takes the United States a step closer to legal sports betting in numerous states, perhaps nationwide, rather than just in select places like Nevada.
The illegal sports betting market is worth billions of dollars annually. Many states see a revenue potential by making it legal and regulated.
The proposed legislation in Iowa would have placed sports betting under the direction of the state’s casinos, and the activity would be regulated by the Racing and Gaming Commission.
Bettors would be allowed to wager on professional and college athletics. Properties that wished to host sports betting would be required to pay a $25,000 license fee, and a tax of 9 percent on sports betting revenue would be applied. The proposed legislation also would legalize mobile sports betting.
Keith Miller, a professor in Drake University’s law school and an expert on gaming, said the rate of taxing sports gambling revenue and demands from professional sports leagues could remain hurdles for an Iowa law.
Some lawmakers may want to tax sports gambling revenues at the same rate as casino revenues. Miller said that’s not feasible because sports gambling is not a huge moneymaker for casinos. Slot machines and table games pay out at a mathematically consistent rate. Unexpected events and other factors make sports gambling more volatile.
And the professional sports leagues have sought a portion of the revenues and what they call an “integrity fee.”
Highfill adamantly opposed both measures.
“The leagues are going to be very creative in trying to get a piece of the money,” Miller said. “Rep. Highfill has been really emphatic in his view; it will be interesting to see if he can maintain that.”
Experts say legalized sports gambling likely would add foot traffic to Iowa casinos, including the potential for many people who do not currently visit them.
Legal sports betting would generate $80 to $90 million in new, annual tax revenue for the state of Iowa, according to an Innovation Group survey. While that is a significant amount of money, it would represent a relatively small drop in the state’s annual $7 billion-plus budget.
Tom Coates, an official with Consumer Credit of Des Moines who has been a leading gambling opponent in Iowa, said he expects a major push to legalize sports and fantasy sports betting as part of an effort by the gambling industry to move into the online competitive interactive gaming market full tilt.
“I’m kind of half surprised that they didn’t pass it like some other states did to get themselves geared up and ready,” said Coates. “The casinos are pushing hard for it and so I’m sure that their army of lobbyists and money will fully on display this next legislative season.”
Coates said casinos face “discouraging” demographics with an aging player base mostly wagering on slot machines at brick-and-mortar locations. The industry is hungry to tap into a market of younger players who eventually will bet online over computers, phones and other electronic devices.