Iowa Lawmakers Make Deal On Collegiate Sports Betting Restrictions

Lawmakers in Iowa have figured out a way to get around the impasse on whether or not to allow betting on college sporting events.
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There are just seven weeks left in Iowa’s ongoing legislative session, and the state’s sports betting discussions are set to undergo significant changes this week.

State Rep. Bobby Kaufmann, the Republican sponsor of HF 648, told US Bets on Monday ahead of a scheduled subcommittee meeting that there’s been a major compromise reached on the legislation.

A major sticking point in the efforts has been betting on college sports, especially among Iowa Democrats. The idea behind banning all bets on college sports is to ensure game/athlete integrity, but it would give the black market (often offshore websites) a significant advantage over an Iowa regulated market. An outright ban would likely be devastating to Iowa’s market potential.

According to Kaufmann, an amendment will be unveiled mid-week that would ban in-play bets on Iowa college teams/players and their opponents, which would be the only restriction on traditional collegiate wagering. Gamblers in Iowa could still bet on the outcome of the game, as well as props, but in-game wagers (for example, if the University of Iowa football team will score on the next drive) would be prohibited. In-play bets would be allowed for games not involving Iowa teams.

The rule would apply regardless of where the game is held.

“I believe this [amendment] puts us in a strong position for a bipartisan vote in Ways and Means,” Kaufmann said. The legislation currently sits in that committee, before a potential vote by the full House. Kaufmann said he has “every expectation” that the bill can advance, adding that he’s “not looking at next year” for sports betting.

Other changes

Kaufmann said there will be other tweaks to the legislation.

Additionally, a quarter of a percentage point of sports betting revenues will go to problem gambling prevention and treatment, according to Kaufmann. The legislation calls for a 6.75% tax on revenue, from which the problem gambling funding would be drawn. The tax rate will remain unchanged.

The companion sports betting proposal in the Iowa Senate, SF 366, has a requirement for mobile betting registration occuring in person until 2021, which amounts to an 18-month delay. After that, registration can be done remotely. Kaufmann said the House bill, which doesn’t currently have that provision, will be amended to include it.

Remote sign-ups are another key component to a competitive regulated market.

One issue that has yet to be hashed out is how to incorporate sports betting within an existing program for charitable contributions on behalf of the state’s casino industry, which has 19 properties. Kaufmann said the casinos have agreed to give “at least” 3% of sports betting revenues to nonprofits, but a precise figure hasn’t been finalized.

If it is 3%, then the effective tax rate would be around 10%, which would still be an industry-friendly percentage. The legislation doesn’t call for a separate tax rate for mobile, nor royalties or data mandates for the sports leagues, who have opposed the Iowa legislation.

Next steps

As mentioned, there are only a handful of weeks left in the session. There’s an upcoming deadline of April 5 for Senate bills to be reported out of House committees and House bills out of Senate committees, assuming they make it that far.

With the first week of April fast approaching, sports fans and bettors in Iowa will know within roughly two weeks whether the amendments Kaufmann is signing off on will provide enough momentum for legalization efforts to be successful on the House or Senate floors.

Iowa considered sports betting legislation in 2018, but it didn’t gain enough traction ahead of the mid-May U.S. Supreme Court ruling that overturned the federal sports betting prohibition.

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