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In fiscal year 2023, gamblers in Iowa bet over $4 billion at licensed casinos and sportsbooks. While this may sound like a substantial amount, it actually represents a decline in sports betting revenue compared to the previous year. State figures indicate that there was $2.247 billion in sports bets made in the 2023 state budget year, down 8.5 percent from the $2.455 billion recorded in the same period the previous year.
This decline in sports betting revenue is significant and marks the first time since the legalization of sports betting in Iowa in 2019 that the state has experienced a drop in revenue. Various factors could have contributed to this decline, including increased competition from neighbouring states and a potential decrease in discretionary spending by Iowans due to economic pressures.
Alongside the decline in sports betting revenue, Iowa also experienced a drop in casino gambling revenue in fiscal year 2023. According to the Iowa Racing and Gaming Association, gambling revenue at the state’s 19 licensed casinos was slightly over $1.754 billion, a 0.7 percent decrease from the $1.766 billion recorded in the previous budget year.
The Council Bluffs market, which includes three casinos, saw a decline in revenue that was roughly equivalent to the state wide difference. This decline could be attributed, in part, to the opening of temporary facilities in Nebraska, with the facility in Lincoln possibly impacting the Council Bluffs market.
Several factors may have contributed to the decline in gambling revenue in Iowa. One possible explanation is the decrease in casino admissions. The number of admissions to licensed casinos in Iowa has been declining in recent years, even before the impact of the COVID-19 pandemic. In 2022, there were 17.1 million admissions, down from 17.8 million in 2021.
Another factor that could have influenced the decline in revenue is the right-sizing of the industry. After the worst of the pandemic, there was a surge in revenue as people returned to casinos, leading to consecutive years of spikes. However, it is possible that the revenue drop in the most recent year was a result of returning to a more normal level after the pent-up demand subsided.
Nationally, casino gambling revenues increased in calendar years 2021 and 2022, and data suggests that they are on track to increase again in 2023. However, Iowa’s gambling industry has generally remained stable, with consistent revenue growth in the years preceding the pandemic. From 2014 to 2019, revenue increased annually, with only two exceptions.
Wes Ehrecke, the president and CEO of the Iowa Gaming Association, believes that the industry’s stability is a testament to the strong foundation of Iowa’s casinos. He stated, “Year in, year out over the last several years, we don’t change a lot. It doesn’t fluctuate a lot. We’ve got a very stable industry here”.
While Iowa’s gambling industry has shown resilience in the face of challenges, it may face potential headwinds in the coming years. Increased competition from neighbouring states, such as Nebraska and Illinois, could impact the revenue of Iowa’s casinos. Additionally, the ongoing efforts to obtain a license for a $250 million casino in Cedar Rapids could further intensify competition.
To address these challenges, Iowa lawmakers passed a two-year moratorium on new casino licenses, which will expire in June. However, the backers of the Cedar Rapids casino have expressed their intention to try again once the moratorium is lifted.
