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Gambling in Iowa

posted on February 15, 2008 at 4:49 PM


A generation ago it would have been hard to imagine Iowa as a gambling Mecca. But today billions are wagered in the state and seemingly every community that doesn’t have a casino, wants one. But is the industry helping the state or just siphoning money from it?

It took years to develop the state’s ethanol industry, and investment capital to build the plants had to be scraped together. State and federal lawmakers had to be convinced subsidies were warranted. One hundred dollar barrel oil helped push the effort as well.

Today there is little argument that it is having a serious economic impact on the state’s economy. Grain prices are at historic highs, prodded in no small part by the demand of the ethanol distillers.

Now, the growth of another Iowa industry, gambling, has soared with much greater ease. Seemingly every bump along the road to growth has been smoothed, and an activity that was once an anathema to Iowans is now a prominent part of the state’s economy.

Iowa entered into the gambling business in 1983 with the enactment of the Pari-Mutuel Wagering Act, singed into law by then-Governor Terry Branstad. The law created Iowa Racing and Gaming commission which oversees licenses and gaming in the state, including the licensing of horse and dog racing. Initially the state had tight rules on gambling, with limits on amounts and the locations of facilities. But over time the rules have loosened and gambling has expanded dramatically.

Iowa now has 17 land- or river-based casinos. There’s an Indian reservation casino in Tama, near Sloan, Iowa, and another near Onawa, with another under discussion in Carter Lake.

Nine of the casinos are owned by companies outside of Iowa. Ownership includes groups from Las Vegas, Pennsylvania, and Missouri all own facilities in the state.

Dubuque’s Greyhound Park and Casino is a not-for-profit organization with 40 percent of winnings going to the city of Dubuque, 30 percent to charity, and 30 percent to capital improvements. Prairie Meadows in Altoona operates under a similar agreement with Polk County.

Several cities and regions across the state have applied for racing facilities, but only Dubuque, Waterloo, Council Bluffs, and Altoona have had racing in their communities. Waterloo halted racing a couple of years after opening.

Since gambling was legalized in the state, communities have been seeking to gain approval for gaming operations. In 1989 nine communities asked local voters to approve excursion boat gambling. All but one county approved the ballot. On March 8, 1990, the Iowa Racing and Gaming Commission approved five licenses for Dubuque, Burlington, Bettendorf, and Davenport. A facility for Sioux City did not secure financing, and the license was revoked.

Three of the licensed boats opened on April 1, 1991. Two others followed in just a couple of months. That put boats in Dubuque, Davenport, Bettendorf, Clinton with Fort Madison and Burlington splitting a boat.

Over the course of the next few years, several operations came and went. The boats struggled with the limits on wagers and the requirements to actually cruise the river. In 1994 loss limits were removed and maximum wagers were lifted and revenues quickly went up.

In 1996 Western Iowa facilities in Council Bluffs were added. Then slots and table games were added to Prairie Meadows, which was hemorrhaging money from horse racing. The slots helped to the track’s $90-million debt to Polk County in just two years.

In recent years constrictions on the industry and the communities seeking gambling have been relaxed.

For example, referenda requirements were eased were lifted. Now a community needs to approve gambling only every eight years.

In 2007 the legislature lifted the requirement that casinos be situated on a river. This allowed larger complexes in Riverside and Worth County. Davenport’s Rhythm City owner, Isle of Capri, is still in talks with the city over the future location of the boat, but it too is likely to be inland. Four new facilities have come on line, Riverside, Worth County, Emmetsburg, and finally Waterloo, spiking the state’s gambling revenue. The rise provokes the question of what is the industry’s saturation point.

It would seem communities are willing to wager places that it has not reached. Voters in Ottumwa and Fort Dodge have already said they would like a piece of the gambling pie by approving a referendum on gaming, but the Racing and Gaming Commission is not looking to issue any new licenses.

Last month, plans were unveiled in Newton to put up a casino near the new Iowa Speedway. Since 1996, revenues from Iowa’s casino industry have climbed steadily. Every expansion of gaming has produced a big jump in activity. Here’s a graph to show that. In each of the last four years, revenues have topped a billion dollars.

Last year, taxes on gambling at the state level generated almost $288 million. Some of that money is redirected back to communities via the state’s Vision Iowa program. Additional money in the form of charitable gifts from the gaming operations also finds its way back to communities. Clearly, the gaming industry has a large profile in the state.

Tags: economy gambling Iowa politics

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