New Nebraska Casinos Could Put Iowa Infrastructure Budget ‘In Serious Jeopardy’

Posted By Russ Mitchell on February 23, 2021

As racetrack casinos gain foothold in Nebraska, concerns over gaming revenue begin to shift to the Iowa side of the Missouri River.

Nebraska’s desire for new revenue prompted 65% of voters to allow six racetracks to become “racinos.” Though Nebraska’s rule-making effort remains at the committee level, Iowa casinos should expect to see fewer Nebraska gamblers by the end of 2021.

Iowa lawmakers are keeping tabs on the progress next door.

Iowa state Rep. Megan Jones, a Sioux Rapids Republican, provided details in her column last week:

“Nebraska’s decision to allow casino gaming at the six in-state locations where pari-mutuel betting is currently allowed will dramatically reduce the amount of traffic coming east across the Missouri River … The IRGC (Iowa Racing and Gaming Commission) expects that some form of casino gaming would begin at these facilities in the summer of 2021 and full-blown casinos would be expected to open up in 2022.”

Casinos help fund Iowa infrastructure

Jones tied Nebraska gambling growth to concerns about Iowa infrastructure projects.

The IRGC shared a revenue overview with the Iowa House Transportation, Infrastructure and Capitals Appropriations Subcommittee.

The state’s gaming revenue tax on casinos is the sole funding stream for the Rebuild Iowa Infrastructure Fund. RIIF supports many popular programs, including Community Attraction and Tourism (CAT) grants, the Environment First Fund and lake dredging.

Jones said Nebraska casino expansion could put some of those efforts “in serious jeopardy.” A drop of $37 million in gaming revenue would mean a 25% reduction in funding for RIIF.

“The IRGC discussed the significant impact COVID-19 had on Iowa’s casinos in Fiscal Year 2020. While the casinos were dealt a body blow by the pandemic, the greater threat to the western Iowa facilities comes from the Nebraska referendum. IRGC noted that Nebraska residents make up 23% of visitors to all of Iowa’s casinos. At the three Council Bluffs casinos, that figure can reach up to 80% of foot traffic in a year, with the bulk of the visitors coming from Omaha and Lincoln.”

Millions at stake

Jones went on to say that the Iowa casinos bordering Nebraska — the Sioux City casino and the three casinos in Council Bluffs — generated almost one-third of the gaming tax revenue collected at Iowa’s 19 casinos in FY19:

“Projections provided to the IRGC said the gaming tax paid by the three Council Bluffs casinos would drop between 25%-40%. The decline at the Sioux City casino would be at least 20%. Combined, that would mean an annual loss of up to $37 million in gaming revenue to the RIIF.”

The gaming revenue tax generated around $300 million in 2019, but Jones said not all of that $300 million reaches the Rebuild Iowa Infrastructure Fund. The fund typically deposits about $160 million to RIIF programs, according to the state representative.

The state diverts about $140 of gaming tax revenue for other programs, including:

  • $55 million for the bond debt payments for I-Job bonds (which don’t get paid off until Fiscal Year 2038)
  • $63.75 million used to fund workforce training programs at community colleges and economic development initiatives at the Regents universities
  • $15 million for water quality projects

Sports betting in Nebraska, too?

Sen. Tom Briese, of Albion, and members of the Nebraska Legislature’s General Affairs Committee, are in charge of the framework for the state’s new casinos.

Gamblers could be playing casino games at the six Nebraska racetracks sometime this year. In addition, legal sports wagers could take place at the “racinos” under the Briese proposal.

State Sen. Brett Lindstrom of Omaha, would like voters to consider another layer of expansion. He proposes a legislative resolution to place statewide sports wagering on the November 2022 ballot.

In the alternative, geolocation technology gives regulators the ability to limit sports betting to within casino property lines. Visitors could use their smartphones to avoid lines at counters or kiosks.

Krissa Delka, Lindstrom’s legislative aide, said the resolution remained in the General Affairs Committee as of Friday.

Delka previously said a fair amount of time would pass before wagering could occur since Nebraska racinos haven’t been completed. Still, some racetrack operators have told Lindstrom’s office they would like on-site sportsbook options in place by fall.

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Russ Mitchell

Russ Mitchell has been covering news and sports in northwest Iowa since 1997, including 11 years as managing editor for one of the most acclaimed community newspapers in the state. He looks forward to keeping readers up to date on the growing sportsbook industry in Iowa.

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