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Editorial: Iowa's gambling laws are draconian

BY DI EDITORIAL BOARD | MARCH 07, 2013 5:00 AM

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A bill introduced in the Iowa House by Rep. Jake Highfill, R- Johnston, would allow Iowans to collect cash prizes from fantasy sports leagues, a practice currently prohibited under the states rather draconian gambling statutes.

The bill, House File 378, would amend the section of the Iowa Code that legalizes certain types of acceptable interpersonal gambling to explicitly include fantasy sports prizes up to $500. Currently, some fantasy sports outlets refuse to pay cash prizes to Iowa residents for fear of breaking the law.

The Daily Iowan Editorial Board supports Highfill’s legislation. The state’s gambling laws are unnecessarily strict and the state Legislature has typically shown an interest in amending the laws only when such changes dramatically supplement Iowa’s tax revenue.

As it stands, laws in Iowa prohibit most types of interpersonal gambling, save for small wagers that meet a litany of qualifications. For example, according to Chapter 99B of the Iowa Code, a legal bet must be “incidental to a bona fide social relationship between all participants” and must not involve potential gains or losses of more than $50.

Chapter 725.7 of the Iowa Code outlines the penalties for the “vice” of gambling, which range from serious misdemeanors for first-time offenders dealing in amounts of money less than $100 to Class C felonies for those trafficking in sums larger than $5,000.

Iowa’s laws prohibiting interpersonal gambling are clearly quite strict, which seems quite hypocritical given the leeway the state has given to casinos and racetracks, where gambling is legal and highly profitable for the state. In fiscal 2013 to date, Iowa has taken in more than $150 million in gaming tax revenue.

That number may continue to grow if Iowa’s gambling commission approves an addition to the state’s armada of legal gambling houses. In Linn County on Tuesday, voters approved a plan to bring a new casino to the Cedar Rapids area; the proposal will be taken to the Iowa Racing and Gaming Commission for approval next.

Currently there are 18 permitted casinos in Iowa; the Linn County casino would be the 19th if approved. Given the prevalence of casinos and that relative strictness of personal gambling laws, it is clear that the existing legal framework around gambling in Iowa is not designed to reduce vice but rather to ensure that the state is able cash in on it.

It is possible that an economic case could be made for allowing casinos in Iowa; they bring jobs and money into a region — such a case was made by proponents of the Linn County casino.

There is, however, at least some reason to question whether casinos are a net positive for Iowa’s economy. A 2005 study from the University of Northern Iowa found that Iowa’s casinos have indeed increased economic output and employment, but they have had no real effect on unemployment rates and are associated with measurable increase in bankruptcies.

Given the mixed economic impact of Iowa’s casinos, the legal discrepancy between casino gambling and personal betting seems oversized.

Iowa legislators should move to liberalize gambling laws for individuals as they have already inside casinos. Highfill’s constituents and all Iowans should be able to cash in on their fantasy sports prowess without fear of the overbearing morality of the law.


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