DES MOINES — Iowans are betting on sports at a record clip, but experts worry it may not be all fun and games.
The Jan. 1 expansion of legal online wagering over electronic devices as close as your pocket has sprung a bumper crop of TV, radio and social media messages hyping “can’t miss” betting opportunities and get-rich-quick promises from out-of-state sportsbooks that are Iowa’s newest growth industry.
And the messages appear to be getting through, with Iowa posting three straight months of record sports betting — with a large share of it placed electronically — and industry experts expecting the March Madness college basketball tournament could push numbers beyond the nearly $150 million gambled in January.
Since sports gambling in Iowa became legal in August 2019, bets placed on professional, college and fantasy sports activities have topped the $1 billion plateau. A majority of that money likely is flowing out of the state with contracts between sportsbooks and state-licensed casinos ranging from just 5 up to 50 percent of the roughly $80 million “hold” going to Iowa entities, according to state regulators.
Sports betting broke out of the gate slowly due to a requirement in state law that Iowans aged 21 and older had to physically travel to a state-licensed casino to set up an account that allowed them to place bets at a casino or online. That in-person requirement expired Jan. 1.
Gambling came to a virtual standstill about a year ago when COVID-19 halted most pro and college sports events, and Iowa’s 19 casinos were shuttered for 11 weeks under a public health disaster emergency order by Gov. Kim Reynolds.
But with casinos back in operation — and with the in-person registration requirement gone and basketball, baseball, hockey, soccer and NASCAR in full swing — the growing number of sportsbooks in Iowa that eventually could approach 20 are fighting to top each other with promotions to attract bettors who are free to tap into multiple wagering apps.
“There was still a little bit of a bridle on that horse,” said longtime gambling opponent Tom Coates. “But when they took away the requirement that they had to physically go onto the grounds of the casino, that really kind of unleashed the horse and it’s been running wild since then. It’s Katy bar the door and here we go.”
While the runaway wagering is good news for the gambling industry, it’s not cause for celebration for folks like Coates, executive director of Consumer Credit of Des Moines, a credit counseling service that has done debt counseling for more than 150,000 people over three decades — including up to 10 percent who were problem gamblers — and Eric Preuss, manager of the Iowa Problem Gambling Services program with the state Department of Public Health.
Preuss noted Iowa is just coming off its observance of March as problem gambling awareness month against the backdrop of an annual NCAA basketball tourney that logs more than $8 billion wagered nationally.
According to Preuss, his office was getting zero calls about sports betting problems last fall, and the overall call volume last year was about half of what it was pre-pandemic. However, he said, in February about 25 percent of the contacts to Iowa’s 800-BETS OFF hotline and other problem-gambling resources were calls, texts, chats or emails about sports betting.
“It’s been increasing every month so it’s an indication that people are getting back in the game, if you will,” he said.
Overall, about 85 percent of Iowans who do gamble don’t have any betting problems, Preuss said. But there needs to be a “safety net” for those who develop addictions or might be at risk. About 13.6 percent of adult Iowans are in the at-risk category, he said, and about 1 percent have a gambling disorder.
According to preliminary data from a 2018 survey of about 1,800 Iowa adults on gambling attitudes and behaviors conducted by the University of Northern Iowa Center for Social and Behavioral Research, about 90.2 percent have gambled in their lifetime with 73.8 percent having done so in the last 12 months and 45.8 percent in the last 30 days, Preuss said. About 130,000 adult Iowans engaged in sports betting in the past year, with 3 percent in the last 30 days.
Preuss said he is hoping to do a follow-up survey this fall to gauge the impact now that Iowans can wager fully online and determine if “we’re seeing a new type of player” who is gambling only on sports — something he did not detect in earlier data. Previously, 99 percent of people who identified themselves as sports gamblers also were doing at least one other type of wagering.
The 2019 sports gambling legislation also provided more money for public health assistance and messaging, so Preuss said his agency has embarked on a campaign that will include the first TV spots in Iowa in 10 years to go with Yourlifeiowa.org and the 800-BETS OFF hotline.
“We have a whole generation of Iowans who have never seen a 800-BETS OFF commercial,” he said.
However, with the onslaught of sportsbook advertising, Preuss said, “we’re getting dwarfed by the millions of dollars that are being spent by the industry right now for finding those loyal customers to be part of their sportsbooks. If they get to 20 sportsbooks, any individual could have an account on 20 sportsbooks if they wanted. That’s the piece that’s a little bit worrisome for me.”
Wes Ehrecke of the Iowa Gaming Association, an umbrella group for the licensed casinos in Iowa, said gambling industry professionals in Iowa entered the foray as the 11th state to legalize sports betting with no way to gauge how it might play out — but reality has exceeded any expectations.
“It was just difficult to project,” he said. “If you legalize it, will they come and I would say they have.”
Sports wagering has been a bright spot in an otherwise tough economic climate for entertainment venues, Ehrecke noted, with casino net revenue off about 20 percent and employment declines from 15 to 40 percent and admissions down an average 30 percent since the venues reopened last June.
“I remember when we were looking at sports betting from the very beginning there really were no formal projections because it really wasn’t offered as economic development,” said Brian Ohorilko, administrator of the state Racing and Gaming Commission. “It was more of a consumer protection to bring the gambling from the illegal market into the legal market, so it really was never about revenue. But still the revenue is significant and if there wasn’t revenue, then there wouldn’t be the activity so you can’t completely not look at the revenue.”
Ohorilko said he did not foresee the sports betting handle in Iowa topping $1 billion in a little over a year and a half, but the new activity is definitely bringing in new customers to wager on sports. Anecdotally, he said, he has been “hearing pretty good things” about March wagering. “We are anxiously awaiting the March numbers to see if they’ve exceeded what we’ve seen in January and February,” he said.
Coates said the wave of sports betting advertisements that have drenched Iowa are “the bait in the trap to try to get the mice in, and the targeted mice generally are young men.”
The paid media drumbeat of promising big money lures are better bets for the gaming houses than the chances for Gonzaga to claim its first Final Four title, he noted, because they work.
Coates said he recently talked to a former client that beat her gambling addiction who confided the TV messages “are tugging on me.” The odds are good that Iowa will see more bankruptcies, suicides, divorces “and all sorts of human fallout” due to the spike in sports wagering.
Coates said he expects the long game for the gambling industry is to move toward sports games and highly addictive online games because the brick-and-mortar casinos are geared more for slow-machine players — “but young people aren’t interested in going and sitting on stools for a long time.” Online wagering is a way “to get the young people into their tent,” he said.
Lobbyists for the 19 regulated casinos and their sportsbook operations asked state lawmakers to consider allowing e-sports to be authorized in Iowa but House File 755 failed to clear last week’s “funnel” deadline to remain eligible this year.
Ehrecke said the proposal would have helped establish a regulated wagering process for players who enjoy e-sporting events similar to what already is allowed by DraftKings and other companies offering daily fantasy sports, by authorizing betting on activities like pro sports leagues’ drafts and player of the year awards.
He also noted there have not been any problems reported to state regulators regarding underage gamblers accessing mobile sports wagering sites since they were established in August 2019.
The latest Iowa Gaming Association numbers for 2020 indicate the 19 venues licensed to conduct wagering in Iowa generated $244 million in payroll, spent $238 million for equipment, supplies and services — mostly involving Iowa-based businesses — made contributions to nonprofits and local governments totaling nearly $90 million and paid nearly $315.9 million in taxes and admission fees for a total economic impact of $888.8 million.
Gambling opponents counter that the roughly $1.5 billion that churns through Iowa’s casinos annually also carries a heavy social cost, and the addition of sports wagering has limited benefit to Iowa since most of the money being gambled is generating profits for out-of-state entities.
Coates said Iowa pioneered a gambling model that departed from tourist-based approaches in Las Vegas and Atlantic City by drawing casino revenue from a 40-mile radius that “ravaged” its own citizens, and then dealt with the social consequences — with every dollar generated costing between $3 and $4 in direct and indirect social costs. he said.
“It’s not a winner, even from an economic standpoint,” he said.
Preuss noted that the pandemic slowed casino wagering, but other options for risking money — such as the Iowa Lottery and the stock market — saw surges.
Lottery officials reported robust sales last week: a double-digit increase fueled by mega-jackpots in their lotto products that also generate revenue that largely leaves Iowa under multistate compacts.
For the most part, he said, most Iowans who gamble do so in a responsible, safe and low risk manner. “They don’t suffer consequences, they have a good time, it’s a form of entertainment for them,” Preuss said.
He said it’s important that Iowans who do struggle with gambling-related problems to know there is help available all day, every day year-round by calling 800-BETS OFF or vising Yourlifeiowa.org.