With the advent of 2021, Iowa’s in-person registration requirement (IPR) for online sports betting will expire. As of Jan. 1, 2021, Iowa sportsbooks will be accepting new account sign-ups entirely over the internet.
This change is monumental for the gambling industry in the Hawkeye State. At the same time, the narrative could be that it’s correcting a mistake.
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Why Iowa’s in-person registration requirement was a bad move
Rehashing the bad thinking behind instituting the face-to-face sign-up mandate is effectively crying over some fresh Iowa Holstein milk spilling out over the ground. To evoke another analogy, it’s trying to put the toothpaste back into the tube.
By and large, other jurisdictions with legal online sports betting have passed on such mandates.
Illinois and Rhode Island both originally instituted a similar requirement, but the RI state government repealed it and IL Gov. JB Pritzker has suspended his state’s for several months.
So, why was IA such an outlier? In the Hawkeye State, casino operators control the gambling industry. That’s the reason the Iowa Racing & Gaming Commission (IRGC) doesn’t license online sportsbook operators directly.
Instead, companies such as DraftKings and FanDuel have to contract with casinos and split revenues with them. The IPR was included in the legal framework to protect casinos’ interests further.
The casinos hoped that by forcing people who wanted to bet on sports online through their doors would also spend elsewhere while on-site. However, that didn’t happen.
Best-laid plans of Iowa men went awry
If we compare a seven-month period before Iowa sportsbooks went live with the first seven months after that date shows a 4.8% rise in casino admissions. Additionally, average adjusted gross revenue for casinos grew only 1.8% in the same comparison.
At the same time, growth for sports betting handle was stagnant. That’s especially true for the online segment. In the first full month of legal sports betting in Iowa, handle was $38.52 million.
The online share for that figure was about 56.6%. A year later, with more online sports betting options, online share was up to 69% of $72.39 million in handle.
Comparing those numbers to other jurisdictions that allowed online registration from the start shows how much the IPR stunted growth. In New Jersey, for example, online sportsbooks took 93.36% of all bets last month. Other jurisdictions’ recent figures were:
- Just under 85% of handle in Indiana in November was from online wagers.
- In the same month in Colorado, online handle represented 98.1% of the total.
- Online sportsbooks in the Commonwealth of Pennsylvania reaped 91% of the overall handle in November.
So, the IPR not only didn’t pay off for casinos but also stunted sports betting numbers. Does that mean 2021 is the start of a new day for Iowa sportsbooks?
Will Iowa’s sports betting market mature quickly?
To a large degree, the growth of the mobile sports betting industry in Iowa from here on out depends on how much operators are willing to invest in the market. Recent events suggest that investment could be serious.
Four new operators have recently made moves to enter the state. That list includes BetRivers, which is the market share leader in neighboring Illinois.
In fact, IRGC spokesman Brian Ohorilko says the commission expects as many as 12 new companies to enter the market in the next few months. Ohorilko stressed that the market will look “very different by summer.”
“Most operators are ready for remote registration. We are seeing controls for registration that are fairly similar to what is occurring in other jurisdictions. Many of the operators have experience in these other jurisdictions.”
So, while operators may be ready for the change, the question is whether that extends to bettors and regulators. Ohorilko expressed confidence in the commission’s preparedness.
“We have approved a number of controls on remote registration and have others that are finishing up. We feel confident the operators will be ready to offer remote registration in a secure manner. … I do not anticipate any challenges for bettors with online registration.”
While navigating the process may be easy, the issue may be awareness for Iowans. That’s mostly on the sportsbook operators that hope to turn them into new customers.
Get ready for an advertising blitz in the Hawkeye State
In most other jurisdictions, the race to the top in terms of market share is a matter of which an operator can outspend the others. Most often, this comes in the form of promotions, like bonuses for first-time depositors.
To this point, market share dominance in IA has depended on proximity to the state’s largest population centers and the number of places for customers to register. That’s why William Hill has been No. 1 so far.
Now that bettors no longer face logistical limitations, the entire paradigm has shifted. Like in other places, it’s all about getting the brand in front of the most eyes. That means a media blitz of registration offers.
“I am unsure what many of the online sports gamblers are aware of, however, it seems that promotional offerings have increased significantly,” Ohorilko said. “As such, I do believe gamblers that are not aware will become aware fairly soon.”
With more options and new promos entering the Hawkeye State, 2021 could be a good year for sports bettors in Iowa. For the operators who endured the IPR, 2021 could be the year they finally see some serious return on their investments.
