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Iowa lawmakers consider spending rising share of sports betting pot

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DES MOINES — Sports wagering in Iowa exploded last year, topping $2 billion, and as the state’s share of the pot has grown so has interest in spending that tax revenue.

“The money coming in is maybe a little more than expected,” House Speaker Pat Grassley, R-New Hartford, said recently. He suggested it’s time to start a conversation about spending the nearly $13 million generated by the 6.75 percent tax on the money bet in nearly 2.5 years since lawmakers approved sports betting in the state in 2019.

The $2 billion wagered in 2021 far exceeded the $575 million bet the previous year. In December, Iowans wagered nearly $266.5 million, or an average of over $8.5 million a day -- which still was less than the records the month previous month.

Since the start of the current fiscal year July 1, 2021, the state has collected $4.9 million in sports betting tax revenue based on the handle, according to Legislative Services Agency.

The growth in the last year is largely attributed to Iowa bettors now being able to set up an account over a smartphone or computer rather than having to go into a casino to open a sports wagering account. PlayIA.com, which covers the gambling industry, reports that 91 percent of Iowa sports betting is done online, not at casinos.

Although $13 million is a relatively small pot of money in the state’s $9 billion-plus annual revenue stream, it has caught the attention of lawmakers.

“Should it just be left out there and you kind of pick-and-choose” what to do with it, Grassley asked on the Iowa PBS show, Iowa Press. “We're looking at doing some things with it that benefit Iowans. So we're going to engage in those conversations.”

He expects no shortage of suggestions.

“When you have unobligated funds, there's probably 100 different ideas,” Grassley said.

House State Government Chairman Bobby Kaufmann, R- Wilton, and ranking Democrat Rep. Mascher of Iowa City, both mentioned using sports betting revenue during their remarks at the committee’s first meeting of the 2022 session.

Legislators “hit that bill out of the park” when they approved sports betting, Kaufmann said. He would like to direct sports wagering revenue to the counties that not home to one of Iowa’s 19 licensed casinos.

“Casinos with counties have a lot of nice things,” Kaufmann said, referring to the gambling revenue that flows to the nonprofit groups that hold casino licenses. Using Riverside Casino & Golf Resort as an example, Kaufmann said although many residents from Linn, Johnson and Cedar counties gamble there, those counties get a “pittance” compared with what stays in Washington County.

He believes there will be bipartisan support for legislation he’s drafting to direct some of that sports wagering revenue to non-casino counties to support first-responder services, especially fire and ambulance, as well as other community improvements such as youth sports facilities.

Mascher would like to see the sports betting revenue “golden egg” spent on mental health. She wants to continue to appropriate money from the Sports Wagering Receipts Fund to support the state Department of Public Health’s Gambling Treatment Program. Lawmakers appropriated $300,000 in fiscal 2020 and $1.75 million in fiscal 2021 to the program. Another $1.5 million was appropriated to the Iowa Economic Development Authority for the Sports Tourism Program.

Mascher is concerned that gambling addiction and related problems will rise since the state has made it so easy to place wagers from smartphones and home computers.

“We don’t have enough counselors and social workers to address those problems that have a direct relationship,” she said. And, Mascher added, the state hasn’t fully funded its children’s mental health system, either.

If there is a drawback to sports betting — in addition to addiction -- it’s the flood of television advertisements that have come with it, according to some State Government Committee members.

“If had known we’d have to sit through all those commercials, I would have voted against,” Rep. Mike Sexton, R-Rockwell, told Kaufmann.

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