Online gambling bills proposed as report shows more than 4.5 million wagers blocked in Nebraska

The numbers get more dramatic from July 2023 to June 2024, when 4.5 million attempts at online bets were denied in Nebraska, a state where online gaming is illegal and controlled by geofence technology.

The yearlong timeframe includes the entire college and National Football League seasons — the sport with by far the most betting interest — says Danny DiRienzo, a senior director with GeoComply, a market leader in geolocation, fraud and risk services that conducted the study.

“Right now, if they’re in Nebraska, they’re going to be blocked from wagering,” DiRienzo said.

While many would-be sports bettors are hitting the geofence, others have found a way around it, Lincoln Sen. Eliot Bostar said, whether by crossing state lines to place a wager or using a VPN to mask their digital location.

Others, are accessing underground, unregulated and illegal betting environments, he added.

On Thursday, the first day of a special session of the Legislature aimed at reducing property taxes in Nebraska, Bostar introduced a measure (LB13) that would legalize online sports gaming in the Cornhusker state.

“Because it is currently accessible to anyone who really wants to participate, our state is already incurring the social costs associated with a gambling population,” Bostar said. “However, we are not generating any of the revenue that would normally come with that activity to the state.”

Revenue from sports betting could be used to fund state services, lower taxes and shore up Nebraska’s fiscal health, Bostar added. “Right now we have all of the downsides of sports gambling and none of the upsides.”

The CEO of the managing group for Nebraska’s two largest casinos said the denied bets show that the desire to place legal bets is leading gamblers to do so by crossing state lines or accessing betting platforms through other means — actions that are costing Nebraska millions of dollars in property tax relief.

“The people want this,” said Lance Morgan, the CEO of Ho-Chunk Inc., the parent company of WarHorse Gaming and the economic development arm of the Winnebago Tribe of Nebraska. 

Nebraska’s population is a bit more than 1.9 million, Morgan said, and yet more than 2 million bets were denied over the last six months on America’s biggest online betting sites.

“I think it’s amazing that there are more people trying to access online sports betting than there are actual people in the state,” Morgan said. “I think that’s very telling in terms of support for this.”

Passing legislation, Morgan said, would merely put the issue into the hands of Nebraskans.

“It’s a low-risk issue, — all you’re really doing is letting people vote on it,” he said. “That’s about as democratic as it gets.”

When Nebraskans approved casino gambling in November 2020, one of the measure’s selling points was the promise of school funding and property tax relief.

The special legislative session that began Thursday has already stoked the topic of online gambling, which Morgan said could increase Nebraska’s gaming industry by tenfold.

Bostar said Gov. Jim Pillen “has a good read on the situation” and has been open to the idea. Other state senators have echoed that sentiment.

“There’s ever-growing support, even from the governor himself, to perhaps be supportive of allowing a vote of the people on expanding gaming to online,” said Lincoln Sen. Danielle Conrad. “… I think it’s right to let the people of Nebraska have a say on that.”

Getting the issue on the ballot by November would require two procedural hurdles. First there would need to be a statutory change to amend the current law to take up the matter during a special session, which was included in Bostar’s bill.

Because it is a constitutional amendment, 30 votes would be needed — more than the 25 needed for other legislation — and if passed, it would not have to be signed by Pillen.

Bostar said introducing LB13 during the special session with an eye on this year’s general election would allow Nebraska to capitalize on the growing desire captured by the GeoComply report.

If the Legislature were to wait until January, when the next regular legislative session is to start, the constitutional amendment wouldn’t be able to go before voters until November 2026, which would see the state miss out on tens of millions of dollars in possible revenue.

“The difference in that time is currently estimated to be $100 million to the state of Nebraska,” Bostar said.

Under Bostar’s proposal, 90% of that revenue would be directed into the Property Tax Credit Cash Fund. The remainder would be split between the Compulsive Gamblers Assistance Fund and the Racing and Gaming Commission.

“It’s redirecting revenue from Iowa to Nebraska,” Morgan said. “I think it makes a lot of good, practical sense. If Nebraska is known for anything, it’s common sense.”

While there are members of the Legislature steadfastly opposed to expanding gambling to include online gaming, there also appears to be growing support for it, Conrad said.

“I think there are others in the Legislature who are looking at these issues and saying, ‘You know, we’re getting a lot of this concern in regards to social problems without getting the benefits of the revenue.’ This is a new revenue stream that we can utilize for property tax relief and school funding and things of that nature.”

One online gambling lobbyist agrees.

“We know there are tens, if not hundreds, of millions of dollars leaving Nebraska for those other states right now,” says Sean Ostrow, a lobbyist who represents BetMGM, DraftKings and FanDuel.

The Nebraska Racing and Gaming Commission takes a neutral stance on the issue, but has been “educating ourselves” on online gaming by talking with neighboring states — Kansas, Colorado and Iowa — “about some of the hurdles in implementing it,” says Casey Ricketts, its interim executive director.

“Clearly, those numbers show there’s a market for online gaming. … We’re preparing for possible legislation.”

GeoComply’s market study also indicates that 64,000 Nebraskans opened online accounts at one of the big four betting sites — DraftKings, FanDuel, BetMGM and Caesars Entertainment — in the last year, a 41% increase.

And while those new accounts could have been a determining factor in the number of denied bets, another part of the study showed more than 21,000 of those denied bets driving over the state line into Iowa.

“That’s where the vast majority of these border crossings occur, but we also see it going into Colorado, Wyoming and Kansas, all the legal (online gaming) states that surround Nebraska,” DiRienzo said. “So clearly, there are a lot of Nebraskans that are interested in placing a legal sports wager rather than visiting an illegal book.”

But online gaming does come with its share of risks.

Opponents can point directly to a scandal that broke last summer involving a number of collegiate athletes at Iowa and Iowa State universities, who made bets online — some on their own teams — by using fake names.

Mobile betting has the potential to turn a stick of dynamite into an atomic bomb, says Mike Sciandra, a recovering gambling addict and counselor at Lincoln’s Choices Treatment Center.

“Mobile betting becomes a lot more problematic when you make it completely mobile and completely devoid of any human interaction,” he said. “… There’s no accountability there.”

Right now, for a Nebraskan, placing a bet online requires doing it elsewhere. An Omaha World-Herald story last year highlighted Omaha residents driving mere blocks into Iowa to make bets. Others walked halfway across the Bob Kerrey Pedestrian Bridge, which spans the Missouri River and connects Omaha to Council Bluffs, Iowa, to place a bet.

“People are finding that little sliver of Iowa when they leave Nebraska,” Ostrow said. “I think those are pretty popular places for people to go place their bets. We know it’s happening now.”

When Iowa launched online gaming in 2019, its revenues increased “by tenfold,” Morgan said.

The numbers corroborate Morgan’s claim. After Iowa went online, its sports wagering increased from about $200 million to more than $2 billion in the first year.

“Make no mistake about it, Council Bluffs is getting its volume from Omaha,” he said. “My guess is Nebraska is missing out on about $30 million in tax revenue from not doing mobile sports betting.”

That’s money that would go toward property tax relief, Morgan said.

Bostar said he feels LB13 “has a shot” to pass in the special session.

“I think my colleagues, when they vote on this, aren’t voting on whether or not they like gambling or want people to gamble,” Bostar said. “The question should be let the people of Nebraska decide whether or not this should be an allowable activity.

“Nebraskans are already doing this; we just aren’t seeing any of the benefits.”