Fifth in a series of stories looking at issues facing the 2019 Iowa Legislature.
DES MOINES — It’s a sure bet sports wagering will be debated this year in the Iowa Capitol, and Statehouse leaders expect robust discussions.
“I know we’re going to discuss it a whole lot. I will bet on that,” said House Speaker Linda Upmeyer, the Republican from Clear Lake.
In May, a U.S. Supreme Court ruling cleared the way for states to legalize gambling on professional and college sports. Previously, only Nevada had widespread sports gambling and a few other states had limited legal gambling.
Since then, seven states have legalized sports betting and 23 more — including Iowa — have introduced legislation, according to an ESPN report.
Last session, lawmakers introduced legislation suggested by the Iowa Gaming Association, which represents the state’s casinos. That bill would have made betting on professional and college sports legal in Iowa’s casinos and online, regulated by the state’s Racing and Gaming Commission. The proposal included a $25,000 licensing fee and a tax on sports betting revenue — the bill called for a tax of 17 percent, while the gaming association suggested a tax of 6.75 percent.
It did not pass, in large part because lawmakers wanted to wait for the U.S. Supreme Court ruling.
With that obstacle cleared, legislators expect more discussion this year.
“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,” said Senate Majority Leader Jack Whitver, a Republican from Ankeny and a former Iowa State University football player.
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 $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 off-shore 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, D-Charles City, said sports gambling’s future in Iowa could depend upon whether players in the industry — namely casinos and sports leagues — can agree on a regulatory framework. Sports leagues are pushing for so-called “integrity fees” that would give leagues a percentage of the total amounts wagered.
Last week, New Jersey Gov. Chris Christie called on lawmakers from gambling states across the country to resist federal regulation of sports betting, and to reject integrity fees. Iowa’s legislation proposed last session did not include the fees.
“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 must realize sports betting does not produce a lot of revenue for the state. 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.”