The final countdown to legal sports betting in Iowa has officially begun.
The Iowa Racing and Gaming Commission approved final rules for the state's initial path to taking bets at a special meeting Tuesday in West Des Moines. Included in those rules is the big date to circle on your calendars: August 15 at noon.
That's when the lid comes off for placing bets on pro, college and some fantasy sports.
“There's an excitement, just that kind of atmosphere,” said Wes Ehrecke, president and CEO of the Iowa Gaming Association. “We have another entertainment option to enjoy watching sports by betting on it, and we can enable players to do that in retail and mobile environments.”
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Sports betting either already exists or will soon be in place at 18 of Iowa's 19 licensed casinos, with only Casino Queen in Marquette currently absent. Of those 18, at least 15 are expected to have mobile weapons from their sportsbooks, according to gaming commission administrator Brian Ohorilko.
Not all casinos will accept bets immediately after the launch date, depending on each location's readiness to provide the service. The two main targets are August 24, for the start of the college football season, and the September 5 start for the National Football League.
But Prairie Meadows in Altoona, already the state's hub for horse racing and betting, is among the sites that won't miss a beat. 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 on the lights.
“Whatever the launch date was is always what our date was intended to be,” said Brad Raines, senior vice president and chief strategy officer at Prairie Meadows. “Day 1, Hour 1 was our goal.”
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Iowa will become the 11th US state to offer legal sports betting 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 industry since a 2018 Supreme Court ruling cleared the way for gambling nationwide. Delaware, Mississippi, New Jersey, New Mexico, Pennsylvania, Rhode Island and West Virginia took bets for the first time 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 renewal of $10,000, to participate. From there, a 6.75% tax will be levied on the casinos hold or the house's share of the revenue once the bets are settled. This tax rate is tied with Nevada as the lowest in the nation. So-called “integrity fees,” paid to professional leagues that want a percentage of revenue, were not included in the final version of Senate File 617, passed in April and signed by Gov. Kim Reynolds in May.
Whether betting in person or via a mobile app, players must first travel to a casino to prove their age and identity and create an account at that casino. Iowa law requires in-person registration by January 1, 2021. Mobile apps must undergo a security and integrity review before being released to public stores or download sites. Rhines said Prairie Meadows will notify prospective players when their application is available and when it's worthwhile to register in person. He said he expects the app's launch to come a few days before the Aug. 15 launch date.
Casinos may have separate third-party vendors that route bets, so it is possible for players to have multiple betting options available for a particular game (for example, small differences between point spread, odds and payout for simple bets on a winner or the types and varieties of in-play proposition bets offered in certain competitions). However, until the 18-month introductory period ends, bettors must travel to each individual casino to have these betting variances available.
In addition, mobile apps will be geo-protected, meaning they will only be able to operate within state borders. Residents in Omaha, Nebraska, for example, would have to cross state lines every time they wanted to bet on their phones.
There are no mandatory mobile betting limits under Iowa 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, bet or time limits.
“Once a player has set a limit, if they wanted to change it, the rules require a waiting period,” he said. The idea, then, is that players who are winning or losing at an accelerated rate won't immediately be able to make a big, impulsive course correction if they've lost bets or place huge follow-up bets if they've been on a hot streak.
Betting on college and professional sports and some fantasy contests is legal under the Iowa bill. In-game tips are allowed as long as they are offered by a sportsbook and are not associated with teams or individual players competing for or against an Iowa-based school.
Further fantasy options, such as daily contests, have yet to be settled by the committee, but could be available for the start of the NFL season. Iowa's bill includes a provision banning daily fantasy games in college sports until May 1, 2020.
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Getting the state ready for legal stakes within three months of passing a bill is no small feat, Ereke and Rhine agreed. Ohorilko said more than a third of the commission's staff of about 50 people has been working in recent months on sports betting readiness issues – writing rules, managing audits, reviewing licenses and the like.
However, the work required to be ready for such a quick turnaround goes back to the Supreme Court decision.
“If you were a state commission and you weren't preparing for (potential legal sports betting) at that time, then you weren't doing your job,” he said. “So we were very active. We didn't know if sports betting would be approved next year, five years, never. But it was important to be in touch with regulators and other jurisdictions to understand what works.
“That preparation helped us tremendously to launch it quickly, but also in the right way.”
Raines praised the commission's work and regular communication with casino operators to expedite the process.
“These are people who moved it at a fast, efficient pace and kept everyone informed and on the same page,” he said. “We have the best set of rules, that make the most sense and comply with the law, to make the best gaming account in the country. That's how it feels and is, relatively free of any controversy or issues.”
Indeed, the effort to legalize sports betting has drawn unconventional divisions and alliances in the Iowa Legislature, with the measure receiving bipartisan support.
That doesn't mean Iowans are united in supporting sports gambling. A February Des Moines Register/Mediacom poll in Iowa found 52% of Iowans opposed legalizing betting on professional sporting events and 69% opposed legalizing betting on college sporting events.
Just 4% of respondents said they regularly bet on sporting events, even informally with friends. 6% said they occasionally make such bets and 8% said they rarely bet on sports. Four out of five Iowans — 80 percent — said they have not placed informal bets on sporting events in recent years.
But that won't stop the casinos that provide the entertainment option or the government from collecting a small portion of revenue. By comparison, casinos in Mississippi — which trails Iowa in population by less than 200,000 — grossed nearly $14.5 million in revenue retention in the last quarter of 2018, according to industry website The Lines.
Hypothetically, a similar revenue markup applied at Iowa's 6.75% tax rate would equate to about $980,000 in those four months.
Ohorilko stressed that there is no track record on which to base revenue projections for Iowa sports betting and said the state does not have an official revenue estimate. Still, he said the commission projects that between 2 percent and 4 percent of all casino revenue will come from that sector, based on player behavior in other states.
Iowa's licensed casinos took part Revenue of $1.457 billion during the previous financial year. Using Ohorilko's baseline, sports betting 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 reducing revenue in the government's pockets was never the primary intention of legalizing sports betting.
Rhines said Prairie Meadows simply sees wagering as another way for fans to engage with a live product and as another mindless entertainment experience a casino has to offer.
“I'm excited for the people who wanted to bet on sports here but couldn't and now they can,” he said. “I'm proud that all casino operators are investing in the experience, not just as a means to an end, but as a real experience. We're entertainment facilities and destinations, and that gives us another facet of that experience.”
