Concerning the licensing and regulation of gambling games, including a moratorium on the issuance of new licenses, and including effective date and retroactive applicability provisions

Description

House File 144 relates to the licensing and regulating of gambling games in the State. The Bill makes the following changes:

• Requires the Iowa Racing and Gaming Commission (IRGC) to include certain topics on the gambling socioeconomic study, which is currently conducted every eight years.
• Places a moratorium on the issuance of new casino licenses in excess of 19 licenses from January 1, 2025, through June 30, 2030, and restricts licenses to those counties with a license on January 1, 2025. The Bill authorizes the IRGC to issue a license allowing a casino to move to a new location within the same county or to issue a license in a county where a licensed facility has closed or a license was suspended, not renewed, or revoked.
• Prohibits the IRGC from issuing a new casino license on or after July 1, 2030, until the issuance of the socioeconomic study due for calendar year 2029.
• Requires an operator of an excursion gambling boat to work with the Iowa Economic Development Authority to encourage tourism from other states and prohibits the IRGC from issuing a new license for a new location that would negatively impact an existing casino located in a county contiguous to the Iowa border or a county that qualifies as a rural county.
• Prohibits the IRGC from issuing a new license if the new licensee would negatively impact the adjusted gross receipts of an existing casino by more than 10.0% or negatively impact the annual distributions of an existing qualified sponsoring organization.
• Prohibits applicants from applying for a license in a county for eight years after the date on which the IRGC denies a license for the same county.
• Requires the IRGC to study Internet gaming’s impact on the State and to issue a report with findings and recommendations to the General Assembly by January 1, 2026.
• Creates an annual inflation adjustment as defined in Iowa Code section 422.4 on the initial casino licensing fees beginning in FY 2005 onward.

House File 144 takes effect upon enactment and applies retroactively to January 1, 2025.

Background

Under Iowa Code section 99F.10, initial license fees for persons awarded a new license to conduct gambling games pursuant to Iowa Code section 99F.7 are as follows:

• $5.0 million if the licensee is located in a county with a population of 15,000 or less.
• $10.0 million if the licensee is located in a county with a population of more than 15,000 but less than 100,000.
• $20.0 million if the licensee is located in a county with a population of 100,000 or more. Initial license fee revenue is deposited into the Rebuild Iowa Infrastructure Fund (RIIF). These are one-time fees paid evenly over the course of five fiscal years.

Under Iowa Code section 99F.4, the IRGC is required to conduct a socioeconomic study on the impact of gambling on Iowans every eight years. The most recent study was released in FY 2022. 2021 Iowa Acts, chapter 142 (FY 2022 Administration and Regulation Appropriations Act), allowed no more than $200,000 of the FY 2022 Gaming Regulatory Revolving Fund appropriation to the IRGC to be expended for the purpose of completing the study. There are currently 19 casinos located in 15 counties in the State. Nine of those counties are contiguous to the Iowa border and seven are rural counties.

Assumptions

• The IRGC will incur additional expenditures to conduct both the expanded scope of the gambling socioeconomic study in FY 2030 and the new study on Internet gaming’s impact on the State in FY 2026.
• The IRGC will contract with a company to conduct both studies required by the Bill.
• Costs for the studies will be funded from the Gaming Regulatory Revolving Fund, similarly to past studies conducted by the IRGC.

Fiscal Impact

The IRGC estimates the cost of each study to be $200,000 or more. The cost of the socioeconomic study would be incurred in FY 2030 and every eight years thereafter. The cost of the study on Internet gaming’s impact on the State would be incurred in FY 2026. Funding to administer the studies would be provided through appropriations from the Gaming Regulatory Revolving Fund.

The fiscal impact of House File 144 on the RIIF from applying an inflation adjustment to initial casino license fees cannot be estimated because the number of new casino licenses that may be issued in future years, if any, is unknown.

Source

• Iowa Racing and Gaming Commission