Iowa's Governor Signs Sports Betting Legalization Bill: SF 617

Thanks to the signature of Republican governor Kim Reynolds on May 13 following the passing of SF 617 through the Senate and House, Iowa will now allow sports betting in the 19 state casinos as well as online. What’s more, daily fantasy sports operators like DraftKings and FanDuel will also be fully legalized and regulated.

Governor Kim Reynolds Signed SF 617, Legalizing Sports Betting in Iowa

Digging into the Details

The legislation authorizing both terrestrial and online wagering in Iowa has an interesting catch to it. Anyone who is of at least 21 years of age is legally allowed to make wagers, but in order to begin placing mobile and/or online bets, you are required to first visit a casino and prove that you are, in fact, of legal age. This restriction is set to expire on Jan. 1, 2021, but until that time, the online market will be somewhat hampered by it.

Another important rule to note is that while betting on college sports is allowed, bettors are not permitted to place live proposition bets on matches involving Iowa colleges, such as those pertaining to how many passing yards a quarterback racks up or how many touchdowns a player scores. Moreover, wagering on minor league games and athletics involving participants under the age of 18 is prohibited.

The Iowa Racing and Gaming Commission will exercise regulatory powers over the new industry.

The Iowa Racing and Gaming Commission Will Have Authority Over Sports Betting

The State of Iowa will tax sports betting revenue at a 6.75% rate. Moreover, licensees will have to hand over a $45,000 application fee and $10,000 annually.

Each sports betting licensee will be allowed to manage two brands or skins unless the commission authorizes a third for a particular license holder. Even assuming that there are no dispensations granted for operating a third site to any organization, there are 19 existing casino licensees, leading to a possible total of 38 Iowa online sports betting platforms.

Daily Fantasy Sports

DFS providers will be licensed under a similar system. They will be taxed at an identical 6.75% rate. However, the flat-rate fees demanded by the state are lower for daily fantasy sports, amounting to an initial licensing fee of $5,000 and $1,000 per annum thereafter. DFS entities that exceed a revenue threshold of $150,000 per year will see their yearly payment jump to $5,000 though.

Where Do We Go From Here?

The Racing and Gaming Commission is tasked with developing the initial rules that sports betting operators must follow. SF 617 specifies that the soonest this could occur is July 4, 2019.

It's almost certain that the appropriate regulations won't be drafted by this optimistic date. Though there is no stated deadline for formulating these rules, it is widely believed that the IRGC will finalize them before the end of the summer, in time for the start of the NFL season.

The bill foresees this process proceeding rapidly by allowing the Racing and Gaming Commission to take advantage of “emergency” procedures for drafting rules. The regime implemented can then be changed down the road if operators and regulators see fit, so the rush to create a system of rules is one that makes sense especially if it results in booking bets in time for the 2019/2020 NFL season.

Legislative Background

Across the United States, the May 2018 Supreme Court ruling that struck down the national ban on sports betting has been causing quite a stir. In what seems like a flash, Americans went from being able to place traditional, single-game bets on sports only in Nevada to sports wagering in what will now be 10 states.

SF 617 progressed through all the needed legislative steps at a seemingly breakneck speed. It was introduced into the Iowa Senate on April 8 and was approved by that body on April 17 with a vote of 31 - 18. Then it went to the house where it was passed by a 67 - 31 majority on April 22. Governor Reynolds signed it into law on May 13.

Despite the speediness of its passage through the Iowan legislative chambers, there was a lot of debate back and forth surrounding the bill. No fewer than 16 hearings were held to discuss it, and many competing plans were proposed, including ones that would have put sports betting in the hands of the Iowa Lottery, the racetracks, or other competing organizations.

Prospects for IA Sports Betting

Iowa may be monetarily capitalizing on its own residents placing sports wagers, but the state is also looking over the border. Neighbors like Nebraska and Minnesota are still a long way from legal sports betting, so there exists a strong feeling that folks may travel to Iowa to place bets.

After all, Nebraskans already spend hundreds of millions of dollars at Iowa casinos annually. Legalized sports betting will undoubtedly increase that figure. Revenue projections for Iowa sports betting are in the $2.3 million - $4 million annual range with a significant fraction of this total expected to come from Nebraskans especially those just across the border in Omaha.

Though the figure of 38 potential sportsbooks appears quite high, we may see it closely approached or even reached by the state's gaming enterprises. The low license fees and tax rate make it possible for even smaller companies to get involved, so wagering on sports in Iowa won't necessarily be dominated by huge betting conglomerates like it is in New Jersey.

Reactions

SF 617 had broad bipartisan support in Iowa, and so disagreements about it have not been centered around party lines. Instead, the arguments surrounding sports betting have focused on broader questions, like the desirability of letting consumers do what they want with their own money, the social impacts of real money gaming, and the fact that offshore sportsbooks already let Iowans gamble without the state receiving any of the revenue.

In Favor of Sports Betting

Though the reasons for legalizing sports betting are many, one of the biggest contributing factors is to drive people off of the black market. Speaking with the Des Moines Register, State Senator Roby Smith (R), who sponsored SF 617, said:

“This just brings people out of the shadows and gives them a regulated environment. It gives people the freedom to choose to do sports wagering, legally.”

State Senator Roby Smith Was a Sponsor of Iowa Sports Betting Legislation

The actual details of SF 617 have been widely applauded as being reasonable and generating a climate for the success of this new form of Iowan gambling. As Sara Slane of the American Gaming Association noted:

The state of Iowa has set its legal sports betting market up for success with a reasonable tax rate, mobile wagering, strong consumer protections and provisions that put responsible gaming at the forefront. Through the leadership of champions like Iowa Gaming Association President and CEO Wes Ehrecke, Iowans will now have a safe alternative to the illegal market that has thrived in the Hawkeye State and across the country.

Against Sports Betting

Some lawmakers were wary of expanding Iowa's already large gambling scene. The fact that online and mobile betting was included in the bill was especially worrisome. State Senator Joe Bolkcom elaborated:

“We’re getting ready to queue up the next generation of gamblers in Iowa. It will start with sports and lead to online slot machines that look a lot like your phone and who knows what else. Where will online gambling lead us?”

Joseph Bolkcom Is an Iowa State Senator and Opponent of Expanded Gambling

The Iowa Catholic Conference was against legalized sports betting and in fact retained the services of several lobbyists to represent its views. In a statement on the ICC's website, we find the following reasoning:

We recognize that gambling can be a legitimate recreational activity in an atmosphere of moderation and control… However, gambling becomes morally unacceptable when it deprives someone of what is necessary to provide for his or her needs or those of others… If sports betting is legalized, the high quality of life that we Iowans prize may suffer from a greater number of people becoming addicted to gambling, and the suffering and damage that gambling addiction causes to families.

Online Poker on the Way?

There's nothing in the text of SF 617 that hints at any prospect for Iowa online poker or casino games to become legally supervised by the state. Yet, it seems as though the Hawkeye State already has all the traditional prerequisites for licensing online cardrooms.

There are about a dozen poker rooms inside Iowa casinos, the largest being an 18-table space at the Horseshoe Council Bluffs. Thus, the state authorities already have a pretty firm grasp on how to regulate peer-to-peer card games at least in a live setting.

Poker Players Can Enjoy Hold'em and Omaha Cash Games at the Horseshoe Council Bluffs

Soon, the Racing and Gaming Commission will broaden its scope to encompass online betting via its role in the nascent sports betting scene. After a couple of years of this, there will really be no rationale for failing to allow its licensees to experiment with internet poker too.

The only negative to proceeding with regulated online poker in Iowa is the small size of the state: With just over 3 million residents, Iowa would have a hard time producing the needed player liquidity to get the market off the ground. Interstate compacts with other gaming states could alleviate this issue although the January DoJ reinterpretation of the Wire Act puts such agreements in jeopardy.

Betting Is Available Today

As alluded to by a number of proponents of legal IA sports betting, there are already betting firms that accept customers from Iowa. They're located offshore, where the U.S. government can't touch them. You too are safe from legal persecution if you should elect to bet online because there are no federal statutes that target individual gamblers, and Iowa's tough anti-gaming laws have never been used to prosecute Iowans for betting over the internet.

For more information on this exciting recreational activity, check out our rundown of the best online sportsbooks for Americans. If poker intrigues you more, then consult our detailed guide to USA internet poker.