Internet gaming issue of states’ rights: Lottery chief

Rich believes the Iowa Lottery has the authority to operate online poker

James Q. Lynch
Published: February 3 2013 | 2:10 pm - Updated: 28 March 2014 | 10:55 am in
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DES MOINES — Terry Rich believes the Iowa Lottery has the authority to operate online poker and other Internet gaming but warned lawmakers Iowa may face competition — from the federal government.

In a presentation to the Legislature’s House-Senate Government Oversight Appropriations Subcommittee last week, Rich said studies indicate more than 150,000 Iowans are playing online poker and spending somewhere upward of $40 million a year on sports betting and online gambling — both illegal in Iowa.

Iowa lawmakers have floated the idea of online gambling in the past but have never approved an expansion into the World Wide Web.

However, Rich doesn’t think any legislative action is necessary.

“We believe we have the authority to do most of our games on the Internet,” he told the subcommittee.

What lawmakers need to know is that U.S. Senate Majority Leader Harry Reid, D-Nev., has pushed the idea of federalizing Internet gaming. Speculation is, Rich said, that under Reid’s plan control of Internet gaming and the revenue would go to Nevada casinos, Rich said.

The bill, which was opposed by the National Governors Association among others, died in the lame duck session late last year, but Rich expects Reid will bring it back.

If it does, it could become a states’ rights issue.

“The Legislature should decide what gaming goes on in Iowa, not the federal government,” Rich said. “We want the decision made by this body.”

It’s hard to gauge how much illegal online gambling occurs in Iowa, but Lottery officials say there is evidence of Internet gaming activity.

Rich noted that over the past five years, some Iowans who received help for problem gambling identified sports betting and online gambling — illegal in Iowa — as their primary forms of wagering.

The numbers are somewhat tenuous, but Rich presented information based on an industry study suggesting that worldwide it’s a $4-billion-a-year enterprise. Given Iowa’s population of about 3.1 million, the Lottery says the state’s share is $40 million a year.

In a 2011 report prepared for the Iowa Racing and Gaming Commission, the state’s take from legalized online gambling — based on Iowa’s 22 percent casino tax — could run from $13 million to $60 million annually.

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