Iowa Introduces and Dismisses iGaming Bill

Not many people saw it coming. But by the time they realized it was happening, it was already a moot matter. It turns out that an Iowa lawmaker wanted to plant the seed for online gaming in Iowa for the future, and he did it with a 2023 bill that came and went in just a few weeks.

Iowa is no stranger to gambling. The state legalized pari-mutuel wagering in 1983 for horse and dog racing. It followed with riverboat casino gambling in 1990, with the first casino opening in 1991, followed by allowing tracks to operate some casino games like slot machines, making them racinos. In 2004, further legislation allowed for more leniency with riverboats – where they can be located – and allowed for video games at racinos that simulated table games.

In 2009, the Iowa Gaming Association commissioned studies to examine the potential for land-based casinos to help underserved gaming markets in the state. The following decade saw the construction and opening of said casinos.

In 2019, the Iowa legislature legalized sports betting and daily fantasy sports contests (DFS), which was to be regulated by the Racing and Gaming Commission. It didn’t take long for the first retail sportsbooks and online wagering platforms to begin operations in August 2019, with DFS launching in October.

A 2011 Online Poker Study

Meanwhile, a piece of legislation passed in 2011 to require a study by December of that year to examine the state regulation of intrastate internet poker. Word began to spread that California, Nevada, and New Jersey were among the states considering legalizing poker online. So, the Iowa Racing and Gaming Commission released said study in December 2011.

The 168-page “Report on the Possible Regulation of Intrastate Internet Poker in the State of Iowa” came to a stark conclusion from the start.

“The United States Department of Justice (USDOJ) believes that interstate internet gambling is illegal based on various federal acts including: the Wire Act of 1961, the Unlawful Internet Gambling and Enforcement Act, the Travel Act, and the Illegal Gambling Business Act.”

It did, however, point out that internet wagering within a state’s borders would be legal, though there were questions as to how to make that happen. (Since then, geolocation technology has proven highly successful.)

The study also pointed out that players were already playing online poker, even after Black Friday, on sites labeled “offshore” poker sites. That play generated approximately $13M to $60M in rake for the operators on an annual basis, as best they could determine. Further, though, Iowa would have a tough time competing with the liquidity provided by those offshore sites with its limited Iowa population.

Overall, the study was inconclusive. It presented numerous pros and cons, areas that required further research, and a general “wait and see” viewpoint.

Online Poker Bill in 2023

Since that study and the inaction that followed, Iowa lawmakers have seen states like Michigan and Pennsylvania, Nevada and New Jersey, even Delaware, and Connecticut and West Virginia legalize online poker. All but Nevada also legalized online casino games, which is the biggest source of igaming income.

At the same time, Iowa dove into the sports betting industry, including online sportsbooks.

Casinos with parent companies that found success in igaming states began to pressure lawmakers to consider the same for Iowa. Casino operators began to realize that igaming complements land-based gaming revenue, debunking the myth that cannibalization would hurt those casinos.

Enter HSB227, technically a House “study” bill, labeled as an “act providing for advance deposit wagering on gambling games. State Representative Bobby Kaufmann sponsored the proposal, introducing it to the Ways and Means Committee on March 8.

It moved fairly quickly. On March 16, the bill made the docket for a March 21 subcommittee meeting. In that much-anticipated hearing, Kaufmann – coincidentally the chair of said committee – he simply mentioned HSB227 because he wanted to start the conversation. “It’s coming in the future,” he said.

The bill did not get recommendation for further movement.

Update: As expected, there's been no movement on the Iowa iGaming bill from @Rep_BobbyK. A day after the March 21 hearing on the bill, HSB227 returned to Ways and Means "without recommendation."
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— Bonus.com (@BonusUpdate) March 29, 2023

Now What?

Presumably, Kaufmann will have those conversations before the 2024 legislative session begins.

He has some support. The list of lobbyist declarations for the igaming proposal included support from the following:

-Penn Entertainment (Ameristar)

-Boyd Gaming-Peninsula Gaming (Diamond Jo)

-Sports Betting Alliance

-Wild Rose Entertainment

There were several “undecided” declarations, leaving room for discussion with the following:

-Light and Wonder

-Iowa Faith and Freedom Coalition

-Iowa Gaming Association

-Iowa Harness Horsemen’s Association

Elite Casino Resorts

-Iowa Department of Public Safety

-Iowa Department of Inspections and Appeals

-Horsemen’s Benevolent and Protective Association

-Iowa Thoroughbred Breeders and Owners Association

-Iowa Behavioral Health Association

The only gambling entity taking a stand against igaming was Prairie Meadows Racetrack and Casino. Others against the bill were the usual suspects, such as the Iowa Catholic Conference, Iowa Faith and Freedom Coalition, and Family Leader – conservative organizations against almost every form of gambling.

There appears to be room for conversations. Whether or not they happen before 2024 remains to be seen.

The faceoff begins in Iowa, with retail casino advocates alleging iGaming would cannibalize land-based gaming revenue. The @SBAllianceUS says it wouldn't, and @RepBobbyK kept his cool during the Iowa online casino bill hearing. He said he wanted to get the convo started.
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— Bonus.com (@BonusUpdate) March 21, 2023