Iowa Casinos Divided Over iGaming Expansion

Online sports betting is legal in Iowa but operators of the state’s 19 casinos are divided over expanding online gambling to include slots and poker. The legislature may require a multi-year study on the issue.Operators of Iowa’s 19 licensed casinos are divided over expanding online gambling beyond sports betting to include slots and poker. Some operators see the online gaming expansion as a way to attract younger casino patrons. Those against it said additional mobile gaming will cannibalize brick-and-mortar operations. Iowa Racing and Gaming Administrator Brian Ohorilko said, “The casino industry is pretty divided. It is 100 percent up to the legislature.” In the coming session, lawmakers are expected to take up the issue. State Rep. Bobby Kaufmann, chair of the Iowa House State Government Committee, said, “I do see the issue being studied this coming session, but I see the outright legalization of it being a multi-year study with all stakeholders providing input.” Iowa Gaming Association President and CEO Wes Ehrecke agreed. He said, “It’s going to take time. You’ve got an industry that’s divided.” He noted eight companies that operate casinos in Iowa are in favor of expanded online gaming and four are opposed. Located in Clinton, near the Illinois state line, Wild Rose Casino and Resort President and Chief Operating Officer Tom Timmons said the company supports the expansion. He said, “I have looked at it long and hard. What I’ve seen and what is happening is there are other states that have it. It’s going to happen someday. I’d like Iowa, rather than waiting to be the 26th or 30th state or whatever that puts us in, why not be in the first 12 or 15 and jump ahead.” Timmons stated online gambling definitely would attract younger patrons. He said, “They’re not coming to the casino. They probably aren’t even going to movies anymore. There are a lot of things the phone and computers are starting to take over so if the industry wants to keep up, I think someday it’s got to happen. I think it exposes us more to say, ‘Hey, you want to come in to have the experience and hear the bells and whistles and watch other people have a good time, have something to eat, see a show? You come to the casino.’” Timmons said Wild Rose already has signed contracts with online casino gaming providers in anticipation of lawmakers legalizing it. “We are trying to look at the future and see what needs to be done,” Timmons said. He added online gaming operators will lobby for the legislation at the capitol. “I’m not going to go down there and propose a bill. I’m going to support it if one gets proposed. Obviously, it’s new. I think they are going to have to get some intelligence, data.” On the other side of the state, plans are moving forward for Nebraska casinos to be built along Iowa’s western border, which significantly impact Iowa gaming revenue in 2025. A recent socioeconomic analysis by the Spectrum Gaming Group predicted casinos in Council Bluffs and Sioux City will face challenges from new casinos planned for Omaha and South Sioux City. The study said Council Bluffs’ three casinos, which derive 80 percent of their gaming revenue from Nebraska residents, could lose 45 percent of their market to the coming Omaha competition by 2025. Ohorilko commented, “The Council Bluffs market is the largest market in the state and so there will be a significant impact. The Iowa casinos will need to prepare for and do everything they can to put their best foot forward.” The study also estimated Sioux City’s Hard Rock Casino could retain 60 percent of its market, but it could lose $35 million within three years after the South Sioux City, Nebraska casino opens. Creighton University Professor of Economics Ernie Goss said lowered gaming tax revenue could affect the funding of public libraries and schools in Council Bluffs and other localities. “You're going to see revenues pull from Iowa residents. And that's money that would have been in the state of Iowa and tax collections that would have been collected in Iowa, that now will be going to Nebraska. It’s going to have some negative impacts on the state of Iowa.” Goss stated competition could continue to arise around Iowa’s borders. And that the state’s 19 casinos should prepare to battle over casino dollars. “There’s just heavy competition, even among the state casinos. This is just going to make that competition even more significant,” Goss said. Iowa’s gaming industry posted record highs in 2021, generating more than $1.5 billion in revenue in the latest fiscal year and directing $330 million in state and county taxes. Last year Nebraska residents voted to legalize casino gambling at the state’s six horse racetracks. All are expected to apply for casino licenses, with some operations starting next year.