Published: March 18, 2022

Iowa's bill to legalize cashless gaming, esports betting moves forward in Senate after House approval

A bill seeking to allow the state gambling industry to adopt cashless gaming and to legalize esports betting has passed the Iowa House of Representatives. The legislation, House File 2497, was passed by a vote of 71-28 and has now moved to the Senate Committee on State Government for initial consideration, where it is holding its first Subcommittee Meeting on Tuesday.  

The legislation would allow for individuals “to access a cash account through a personal electronic device for purposes of cashless wagering” on the gaming floor of the 19 licensees operating in the state.

The proposed bill would allow casinos and their financial technology partners to deploy cashless systems, as long as they introduce a number of safeguards, including a cooling-off period before a guest could reload their digital wallet.

Meanwhile, Division III of HF2497 seeks to include electronic sports events within the provisions of sports wagering by amending the definition of “authorized sporting event” to include esports.

Thus, the bill defines “electronic sports event” as a multiplayer video game event governed “by a recognized professional, international or collegiate video game governing body.”

The esports expansion would build upon the May 2019 legalization of sports wagering, and the commencement of mobile operations in August. Sports gaming currently includes professional, collegiate or international sports events, as well as professional motor race events.

Fiscal notes from the Legislative Service Agency cite a Socioeconomic Study and Market Analysis from non-partisan consultancy Spectrum Gaming Group which argues the esports market, while a nontraditional market, “is expected to grow over the coming years.”

Sports wagering tax receipts are expected to only increase “slightly” with the addition of electronic sports events, leading to a “minimal” increase in state tax revenue. However, given the novelty of the esports market and its potential for growth, the overall size and scope of any increase “cannot be estimated at this time.”

The cashless wagering provision has led to a mixed response: while some lawmakers have praised the convenience, opponents argue that cashless gaming could lead to increased rates of gambling disorders and addiction.

Representative Shannon Lundgren (R-Peosta) said it would be convenient as many people now have digital wallets on their smartphones while not carrying cash, reports Radio Iowa. She highlighted the e-wagering system would allow guests to set a time limit and an amount which, once gone, would launch a cooling-off period before the limit is up to reload it.

“This makes the availability and access to gambling so much easier, thus increasing its danger and addictive power,” countered Representative Sandy Salmon (R-Janesville). “People tend to think that when something is legal that it is safe and even helpful and that it can’t hurt you. And that’s a lie.”

In addition to legalizing cashless wagering and esports, another provision of the bill would also make it legal to bet on charity events featuring professional athletes, like the NBA All-Star game, as well as permitting to bet on player-of-the-year awards and drafts held by professional leagues.

The proposal defines a “sports-related event” as one that takes place in relation to an authorized sporting event, but is not tied to the outcome of a specific athletic event or contest, such as draft or player awards.

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