Iowa's Sports Wagering Decision Likely Stretching Into Final Months of 2019

Iowa's sports betting landscape is shaping up to be a thrilling dance, with all eyes on whether the Hawkeye State will legalize wagers on college sports in 2019. The optimism around legalization has been in the air for some time, but a compromise over specifics still has not been reached.

According to reports from The Daily Iowan, conflict exists among policymakers over whether to make it illegal to place bets on college sports. Some Democrats want such wagers, as well as in-play wagers on individual athlete's performances in collegiate and professional sports, to be prohibited. However, the pro sports leagues, including the NBA, warmly welcome in-play wagering, as Commissioner Silver stated in April 2018, "[In-play wagering] are all potential, additional forms of engagement for viewers."

The sponsor of the legislation, along with other backers, argues that the 35-year-old Iowa Racing and Gaming Commission should have discretion over which wagers to allow. The question becomes: will a legal, regulated Iowa sports betting market be robust enough to sway policymakers away from banning bets on college sports?

Several stakeholders, including the Iowa Gaming Association, DraftKings, and FanDuel, have publicly voiced their support for the legislation. The absence of opposition from the Board of Regents, which oversees the University of Iowa, Iowa State University, and the University of Northern Iowa, reinforces this support.

However, proposed amendments and concerns surrounding regulations could prove uncertain for the bill's passage. Banning bets on college sports may make the bill less appealing to stakeholders due to the popularity of college football and March Madness. State Rep. Bobby Kaufmann, a Republican sponsor, expressed concerns that banning such bets would only result in people staying involved in the black markets.

A recent poll by the highly respected Des Moines pollster suggests that public sentiment toward sports betting in Iowa may be weaker than in other states. The poll found that only 25% of Iowans favor the legalization of betting on college sports, with 68% opposing. However, with an attractive tax rate of 6.75% and plans for mobile betting and remote account registration, Iowa could see upwards of $4 billion in annual sports betting handle, generating $250 million in taxable sports wagering revenue[2]. The potential revenue could help sway policymakers, but only if college sports wagers are included.

Excluding college sports wagers from the bill would lead to a considerable drop in the estimated revenue and handle. Nevada, for example, saw a record-breaking $522 million in March sports betting handle in 2018, with college sports wagering closing the gap on NFL wagers[3]. A ban on college sports wagers in Iowa would mean that the benefits would largely be given to offshore sites, leaving the state with little revenue. Furthermore, bettors may choose to engage in black market betting instead, or even travel to other states that legalize sports betting, such as Minnesota, Illinois, and Missouri, all of which are currently considering bills.

Iowa started the year with ten study bills to lay the groundwork for sports betting, but now there are only two alive and well ahead of the stretch run in Des Moines[4]. With only a month and a half left in the session and the risk of bill failure, the state must act quickly to reach a compromise on the specifics of the bill.

The optimism around legalizing sports betting in Iowa, including wagers on college sports, has been in the air for some time, but a compromise over specifics still has not been reached.
Some Democrats want wagers on college sports and in-play wagers on individual athlete's performances in collegiate and professional sports to be prohibited.
The pro sports leagues, including the NBA, warmly welcome in-play wagering, as Commissioner Silver stated in April 2018.
The question becomes: will a legal, regulated Iowa sports betting market be robust enough to sway policymakers away from banning bets on college sports?
Several stakeholders, including the Iowa Gaming Association, DraftKings, and FanDuel, have publicly voiced their support for the legislation.
Banning bets on college sports may make the bill less appealing to stakeholders due to the popularity of college football and March Madness.
Excluding college sports wagers from the bill would lead to a considerable drop in the estimated revenue and handle, with potential revenue largely given to offshore sites and bettors choosing to engage in black market betting instead.
With only a month and a half left in the session and the risk of bill failure, the state must act quickly to reach a compromise on the specifics of the sports-betting bill, which could help generate millions in taxable sports wagering revenue.