Sports Betting Takes The Field In Iowa

Aug 14, 2019

Classic hits play over the speakers on the casino floor at Lakeside Casino near Osceola, in southern Iowa. Players sit at slot machines with names like Buffalo Grand, Lightning Link and Wild Cougar. The games erupt with lights and alarms.

Down an escalator and beyond the bar (and more slot machines) is the corner of the casino being renovated into a sportsbook, a betting parlor dedicated to wagering on sports.

The Lakeside sportsbook will look much like a sports bar. People will sit at tall tables surrounded by flat screens, except people won’t just watch the games. Starting at noon on August 15, they’ll be able to put money on them.

General manager David Monroe is eager for opening day.

“It’s going to be a very big day for us,” Monroe said. “It’s a big day for the state as a whole and specifically for our property because we’re one of the casinos that chose to launch day one.”

Sports betting is taking effect in Iowa only three months after it was signed into law and just over one year since a federal ban was lifted by the U.S. Supreme Court. The rules approved by the Iowa Racing and Gaming Commission allow people over 21 years old to place money on most professional and college sports as well as online fantasy sports leagues.

Monroe grew up in the state of Nevada, which was the only place where wagering on sports was legal until the Supreme Court stepped in. While he was living there, putting money on a game was part of being a fan and he thinks gambling could become part of Iowa sports culture, too.

Lakeside Casino general manager David Monroe.
Credit Grant Gerlock / IPR

“I find out a game is on TV and I put a $5 bet on it and all of a sudden I’m rooting for a team that otherwise I was somewhat indifferent on,” Monroe said. “So it’s going to be fun. It’s definitely going to attract some new guests to our property.”

Casinos are promoting the milestone. But there's more to see beyond the ribbon cutting ceremonies, celebrity appearances and giveaways.

Moving toward mobile

While casinos are betting that sports will drive more traffic through their doors, most wagers will probably come through mobile apps.

“If a state does not promote that market, they’re not going to be maximizing their revenue,” said Keith Miller, a law professor at Drake University. Iowa will allow mobile gaming anywhere within state borders, but Miller said the state’s law preserves a role for brick-and-mortar casinos. Until the year 2021, bettors have to go to a licensed casino to sign up for their mobile account. “They have to show ID and establish that they’re 21,” he said. After that they can put money on their account and start making wagers. “But they have to register in-person first.”

Casinos and mobile vendors are forming alliances. Lakeside and three other Iowa casinos will use a mobile app from the Las Vegas-based sports betting company, William Hill, which will also run their on-site sportsbooks. In other states, the majority of the company’s wagers are mobile, according to CEO of U.S. operations, Joe Asher. In Nevada, Asher said, “about two-thirds of our business is on mobile and one-third on retail. In New Jersey it’s 80-85 percent mobile.”

Other casinos are making their own deals. Rhythm City in Davenport is working with BetWorks. Harrah’s in Council Bluffs is using Caesers Interactive, an offshoot of its parent company. The sports betting companies bring the technology, the casinos bring customers and they share the revenue.

Ahead of the game

Starting sports betting this week means casinos can work out any kinks on baseball and golf events before the popular betting seasons of NFL and college football roll around.

Colleges are also trying to get ahead of any problems that could be caused by sports betting. The NCAA outlaws gambling on any sport it sponsors, at any level of that sport. That means there can be no bets on the NFL, NBA or even Olympic fencing for players, coaches, staff or others affiliated with the athletics department.

David Monroe shows off the future sportsbook space at Lakeside Casino. By opening day more big screens will be installed and the casino will be ready to take bets.
Credit Grant Gerlock / IPR

Kurt Hunsaker, the assistant athletic director for compliance at Iowa State University, said there’s nothing new about that rule, but what is new is that athletes are more likely to encounter bettors trying to use their campus connections to gain an edge. Perhaps by knowing whether a star player is injured.

“A student athlete goes to class, a classmate has placed a bet on a game and wants to know who will be playing,” Hunsaker said. “Those are definitely things we’re educating student athletes about.”

Hunsaker said a violation of NCAA gambling rules could result in sanctions for the player or their school. An NCAA committee considered creating a standard injury report to satisfy interest from the gambling industry, but the members ultimately decided against it.

Small budget boost

Just as casinos bring in fresh revenue from sports betting, the state will also take its cut. One of the reasons states jumped on sports betting after the federal ban ended is to tax what had been an unregulated market.

“There’s not a state in this country without residents already betting,” said Lakeside’s Monroe. “We know that to be true because look what’s happening in New Jersey.”

New Jersey recently passed Nevada in sports betting volume, only one year after it became legal.

It’s also true that some Iowans were already betting on sports – 6 percent in the last year according to a Department of Public Health survey, about half of them between 18 and 35 years old.

“So states are going if it’s happening, let’s control it and ensure integrity and make sure we have a tax base coming out of it,” Monroe said.

Iowa will charge casinos 6.75 percent for their sports betting income. But the future payout to the state will likely be relatively small. Even in states like Nevada, sports betting is a high-volume, small-margin game. 

“It is dwarfed by roulette and craps and blackjack,” said Drake's Keith Miller. “For goodness sakes, the amount of money that is produced by sports betting compared to slot machines is just a huge, huge gap.”

The Legislative Fiscal Office made a rough estimate when sports betting was up for debate and determined it may be worth $2-$3.5 million in state tax revenue, including from fantasy sports. That’s not exactly a jackpot compared to nearly $300 million in taxes collected from casino gambling last year.

“Every bit helps but industry was honest about this, it’s not for the state to get a lot of revenue,” Miller said.

According to Legal Sports Report, a website that tracks sports betting laws around the country, sports gambling revenues are much higher in Nevada and New Jersey — more than $20 million since June 2018 — but those states anchor the industry in the United States.

Still, Iowa is making its play and it’s not alone. Iowa is the 11th state in the U.S. to go live with legal sports gambling and at least half-a-dozen more are close behind.