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Overview: Online Sports Betting In Iowa

Overview: Online Sports Betting in Iowa

Almost a year to the day after the Supreme Court ruled PASPA unconstitutional, Iowa legalized sports betting. The Iowa Racing and Gaming Commission drafted rules for the new industry at breakneck speed. Sports betting was up and running in the Hawkeye State three months later. Iowans placed their first sports wagers on August 15, 2019. Despite the coronavirus pandemic seven months later, Iowa met its tax revenue projections. Here’s how online sports betting came to Iowa – and why online sports betting doesn’t dominate the market like it does in other states.

How Iowa Legalized Online Sports Betting

The Iowan sports betting bill got a lot of support from Republican legislators. They hit the black market angle hard and emphasized that they were going to regulate a previously illegal industry. Republicans controlled both General Assembly chambers and the Governor’s office. So, they had an easy time creating sports betting legislation that met their goals. Iowan sports betting has a (relatively) low operator’s fee, a low tax rate, and three skins per casino.

Iowa’s sports betting industry stands out as a business-friendly model. However, bettors had to deal with one irritant as a result. Iowa wanted to give casinos the chance to cash in on sports betting once it went live. Instead of ceding the market to online operators from the beginning, Iowa came up with a clever requirement. For the first 18 months of sports betting, bettors could wager at retail sportsbooks. But to wager online, bettors would have to register for a sportsbook account in person at a casino.

In-Person Registration and Online Sports Betting Revenue

That in-person registration requirement likely depressed online sports betting revenue. Online sports betting can make up 80-90% of all betting handle in other states. But online sports betting in Iowa only made up about two-thirds of the market.

Other states require bettors to register online accounts in person, too. Rhode Island didn’t allow in-person registration until it passed a series of bills in July. Rhode Island’s online sports betting revenue exploded from September on. (Even though the bill passed in July, the first online registrations wouldn’t have been until August or September.) Nevada still requires in-person registration, and a little over half of its sports betting revenue comes from online sportsbooks.

But Iowans have a light at the end of the tunnel. The in-person registration requirement ended on January 1, 2021. By the time this goes live, you won’t have to go all the way to the casino to create an account. You’ll be able to do it from your living room couch while you’re watching the game. It’ll make sports betting more accessible to bettors and likely increase online sports betting revenue substantially. (Surprise, surprise. Making sports betting more accessible will lead to more people trying it.) Iowa’s sports betting boom will probably come in 2021 once remote registration arrives.

How Profitable Is Iowa Sports Betting?

Iowans should feel happy about where their sports betting industry is going. Here’s how Iowa sportsbooks did financially in one full fiscal year, compared to the first five months of the current one:

  Fiscal Year 2020 First Five Months of Fiscal Year 2021
Total Betting Handle $368 million $314 million
Sportsbook “Net” Revenue $25 million $27.6 million
Iowa Tax Revenue $1.79 million $1.87 million

Iowa sportsbooks are already making more money for themselves and for Iowa in five months than in the first twelve. Add remote account registration to the mix, and Iowa’s sports betting industry is set to soar to new heights in 2021.

If you’re wondering where that tax revenue goes, you’re not going to get a clear answer. The money will go to one of two places: the general fund or the Sports Wagering Receipts Fund. Iowa’s general fund is the part of its budget that’s funded by taxes. That’s one big pile of money that the State will spend at its discretion.

The Sports Wagering Receipts Fund is a $300,000 fund for gambling addiction treatment. (At least, that’s what funding was in the 2020 budget. That amount could change in 2021.)

The Sports Wagering Receipts Fund likely attempted to satisfy opponents of Iowa’s sports betting bill. The opposition raised concerns about gambling addiction – especially with online registration and betting on the horizon. Providing funds to treat it seems like a counterweight for allowing online betting from the beginning. But sportsbook self-exclusion lists can be strong controls for problem gamblers, too. Whether Iowa’s balance between business interests and social welfare works will be determined by 2021’s online sports betting expansion.

Iowa Online Sports Betting

Iowa was one of the first ten states to legalize sports betting, and there’s still more excitement to come. Bettors have had to register for online sportsbook accounts in person, making it harder to participate in online sports betting. But when bettors can create accounts from home, online sports betting will spread across Iowa. It’s already happened in Rhode Island, and Iowa is unlikely to be an exception. If you’re interested in starting the new year with a new sportsbook account, check out our guides on sports betting and creating an account. It’ll be easy to get started once the new year begins. You’d hate to miss out!

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