The Iowa Racing and Gaming Commission (IRGC) met on Thursday, September 29, 2022 at The Rewind Hotel, 6075 Mills Civic Parkway, W. Des Moines, IA. Commission members present were Julie Andres, Chair; Daryl Olsen, Vice Chair; and members Amy Burkhart, Mark Campbell and Lance Horbach.
APPROVE AGENDA: Chair Andres called the meeting to order at 8:30 AM, and requested a motion to approve the agenda. Commissioner Campbell moved to approve the agenda as submitted. Commissioner Horbach seconded the motion, which carried unanimously.
APPROVE MINUTES: Chair Andres requested a motion regarding the minutes from the August 24-25, 2022 Commission meeting. Commissioner Olsen moved to approve the minutes as submitted. Commissioner Burkhart seconded the motion, which carried unanimously.
ANNOUNCEMENTS: Brian Ohorilko, Administrator of the IRGC, advised there would be no October meeting. The next Commission meeting will be held on November 17, 2022 at the Rhythm City Casino in Davenport. Mr. Ohorilko noted there will be no meeting in December, the next Commission meeting will be on January 26, 2023 at Diamond Jo Worth in Northwood, Iowa.
DIAMOND JO, LLC: Robin Maxon, legal counsel, requested approval of the Amended and Restated Online Market Access Agreement with Betfair Interactive US LLC on behalf of Diamond Jo, LLC. She advised the economic terms and operational responsibilities under the original agreement remain unchanged in the new agreement. The amendment allows Betfair the right, subject to the enactment of any future applicable law, to operate an online casino or online poker in a first skin position at the Diamond Jo Casino, and omits Diamond Jo Worth, which was a party to the original agreement and opens up space for an additional skin at that casino. Further, the agreement modifies Diamond Jo’s right to terminate the agreement in the event of a sale. Additionally, there were some modifications to the parties’ marketing limitations and obligations. The parties also made general clean-up edits.
Commissioner Campbell asked Mr. Ohorilko to address the addition of the terms relating to online gaming. Mr. Ohorilko stated the agreement contains a provision for Betfair to have priority to operate an online casino or online poker should online gaming become authorized in the state. Online gambling is not permitted in Iowa at this time. He stated if the Commission should move forward on this agenda item, it is not a presumption that it will become legal on the Commission’s part.
Hearing no further comments or questions, Chair Andres requested a motion. Commissioner Campbell moved to approve the Amended and Restated Online Market Access Agreement between Diamond Jo, LLC and Betfair Interactive US LLC as submitted. Commissioner Olsen seconded the motion, which carried unanimously.
IOC BLACK HAWK COUNTY, INC.: Chad Moine, General Manager, requested approval of a remodeling project to add an outdoor patio, which would provide additional seating for the Brew Brothers restaurant. The patio would provide an outdoor dining experience for patrons.
Commissioner Horbach asked for clarification as to the location of the patio. Mr. Moine stated the patio would provide a westward view and be located to the right of the front entrance to the casino.
Hearing no further comments or questions, Chair Andres requested a motion. Commissioner Burkhart moved to approve the remodeling request as presented by IOC Black Hawk County, Inc. Commissioner Olsen seconded the motion, which carried unanimously.
HARVEYS IOWA MANAGEMENT COMPANY, LLC: Thomas Roberts, General Manager, requested approval to renovate the banquet room and the Backstage Diner at Harrah’s into a celebrity chef restaurant concept by Guy Fieri. The casual restaurant is meant to bring a feeling of unexpected discovery and energy. He stated this will be a $4 million investment. The restaurant will have 233 seats; the Backstage Diner will still have seating, just a different concept. Once you enter the restaurant, the seats will extend back to the bar and patio overlooking Stir Cove. The concept will center around music, rough finishes, and reclaimed items. Mr. Thomas stated construction is slated to start in November, and will take 5-6 months to complete. They hope to have construction completed in time for the 2023 Stir Cove season. He stated they have submitted a contract with Pinnacle Construction, an Iowa vendor, for the project.
Chair Andres asked if Mr. Fieri would attend the opening of the restaurant. Mr. Roberts stated he usually attends the openings and ribbon cutting.
Commissioner Olsen stated it looks like a fantastic project, and moved to approve the remodeling request as submitted by Harveys Iowa Management Company, LLC. Commissioner Burkhart seconded the motion, which carried unanimously.
HARVEYS IOWA MANAGEMENT COMPANY, LLC: Mr. Roberts requested to withdraw the Approval of Second Amended and Restated Sponsorship and Operations Agreement with the Iowa West Racing Association from the agenda.
IOWA WEST RACING ASSOCIATION (IWRA): Brenda Mainwaring, Chief Executive Officer, advised the agreement for IWRA’s management of Horseshoe Casino is over two decades old; is unique, complicated and outdated. Following lengthy discussions between the parties, they have agreed to address specific areas of the agreement and determined a Settlement Agreement was the appropriate manner to do so. She stated none of the changes would be visible to the community, with the exception of the additional commitment of $75,000 on an annual basis from Horseshoe management to address non-profit needs within the community. Ms. Mainwaring requested approval of the Settlement Agreement.
Mr. Roberts stated Horseshoe Casino is excited to continue their long-standing relationship with IWRA.
Hearing no comments or questions, Chair Andres requested a motion. Commissioner Campbell moved to approve the Settlement Agreement between IWRA and Harveys BR Management Company as submitted. Commissioner Burkhart seconded the motion, which carried unanimously.
CONTRACT APPROVALS (OSV – OUT OF STATE VENDOR; RP – RELATED PARTY):
Harveys Iowa Management Company, LLC: Mr. Roberts presented a contract with Pinnacle Construction as a construction vendor.
Hearing no comments or questions, Chair Andres requested a motion. Commissioner Olsen moved to approve the contract as submitted by Harveys Iowa Management Company, LLC. Commissioner Campbell seconded the motion, which carried unanimously.
IOC Bettendorf, L.C.: Nancy Ballenger, General Manager, presented a contract with Business Radio Sales & Service to upgrade/replace all radios and radio equipment property-wide.
Hearing no comments or questions, Chair Andres requested a motion. Commissioner Burkhart moved to approve the contract as submitted by IOC Bettendorf, L.C. Commissioner Campbell seconded the motion, which carried unanimously.
Diamond Jo, LLC: Wendy Runde, General Manager, presented a contract with Zuvid Surveillance, an out-of-state vendor, to upgrade the surveillance system on property. She noted her cover letter indicates a Request for Transaction Approval would be submitted at a later date for the equipment; however, the contract before the Commission includes labor, discovery and equipment. She advised approximately $153,000 of the total contract is related to the installation, and the rest is an estimated cost for the equipment. Ms. Runde stated they contacted the current surveillance company, who supplied the names of three Iowa integrators who were provided an opportunity to bid. Two submitted bids, and one passed. The Iowa bid closest to Zuvid was more than double the price, nor did the company have any experience in installing casino surveillance systems.
Commissioner Olsen commented on the discrepancy in labor costs between the bids. He asked Ms. Runde if she was confident the company with the low bid can get the work done for the stated bid. Ms. Runde stated she was confident because the corporation has done business at other Boyd properties. She advised the Request for Proposal was very detailed; there was not much left to the imagination with regard to the scope of the project. The other out-of-state vendor was 75% higher. She is not sure why Zuvid’s bid is at the dollar amount it is, but they received the same RFP as all of the vendors contacted. Ms. Runde stated the questions coming back to the property from some of the vendors with regard to the RFP were concerning as it didn’t appear they had done their homework.
Commissioner Olsen noted that while the Commission prefers the facilities use Iowa vendors when possible, it wasn’t possible in this situation.
Commissioner Campbell thanked Ms. Runde for the effort put forth in attempting to utilize an Iowa vendor.
Hearing no further comments or questions, Chair Andres requested a motion. Commissioner Campbell moved to approve the contract as submitted by Diamond Jo, LLC. Commissioner Burkhart seconded the motion, which carried unanimously.
SCE Partners, LLC: Doug Fisher, General Manager, presented the following contracts for Commission approval:
- HR IA Gaming LLC – Hard Rock Sports Book License Agreement
- Scientific Games d/b/a Light & Wonder – Sports Book Platform Fees (OSV)
- Mohawk Carpet Distributions LLC – Purchase Carpet for Hotel Carpet Replacement (OSV)
Mr. Fisher stated he personally reached out to the Iowa vendors to solicit bids for the carpet. The bid from Mozaks came in 60% higher than the bid from Mohawk.
Commissioner Burkhart noted SCE Partners is trying to match an existing pattern, which also presented some limitations.
Hearing no further comments or questions, Chair Andres requested a motion. Commissioner Horbach moved to approve the contracts as submitted by SCE Partners, LLC. Commissioner Olsen seconded the motion, which carried unanimously.
Riverside Casino and Golf Resort, LLC: Damon John, General Manager, presented the following contracts for Commission approval:
- Made Simple – Continuity and Promotion Gifts (OSV)
- Performance Food Service – Specialty Food Purchases
- Quest Software, Inc. – Kace Systems Management Software (OSV)
Commissioner Burkhart asked Mr. John to explain how Made Simple was selected to provide promotion gifts. Mr. John stated Made Simple is a casino continuity vendor, which is a specialized business model in the casino industry. Made Simple provides month-long gift programs, direct mail marketing production and design, does pre- and post-analysis and provides buyback programs and free return shipping on unused products. He advised there are no casino continuity vendors located in Iowa; the majority are located in New York, Los Angeles, and other parts of California. Mr. John stated the facility takes a lot of pride in their Marketing Department in sourcing Iowa gifts; they utilize Scheel’s, HyVee, Hawkeye Harley Davidson, and are working with Leisure Zone in Coralville for the October promotion. Casino continuity vendors offer different types of services. The previous two vendors utilized by the facility are Mark-It Smart and Imagine This. He noted the vendors utilize similar products and the sample promotion items received have some recurring product. Mr. John stated Made Simple had some different products packaged together. He noted the continuity companies also have licensing agreements with various celebrities for the products being offered.
Commissioner Burkhart stated the information was very helpful. She encouraged Mr. John to include more information when submitting out-of-state contracts for Commission approval. The information provided shows bids from three out-of-state vendors, which goes against the Commission rules of trying to use a product made in Iowa or sourced from Iowa.
Commissioner Burkhart also noted the contract being submitted for approval is for $500,000, but the products being purchased total $155,900.00. She asked for an explanation of the discrepancy. Mr. John stated the Marketing team liked some of the other products they saw, but had not heard back from the vendor when the RTA was submitted if the number of products necessary would be available in the preferred months. The $500,000 value was submitted in the hope they would be able to utilize the vendor in future months should the products be available.
Chair Andres stated she was interested in the analytics portion as she didn’t understand the concept of the continuity vendor. Mr. John advised continuity companies were started by individuals who were previously involved in casino operations and understood the analytics the casino industry utilizes to evaluate player worth and reinvestment strategies. The continuity vendors have several years of analytics due to the years of operation in various markets, including Iowa. The pre-analysis will show what kind of lift the facility can expect to receive from certain gift programs, and the post-analysis will help determine if the program was successful.
Chair Andres asked if there was some kind of “magic” to the gift rather than something that could be purchased from an Iowa vendor. Mr. John stated the continuity program gift is typically 4-5 pieces in a set; the goal is to get the guest to return each week in order to complete the set.
Commissioner Burkhart noted history would show that a significant amount of Riverside’s purchases is with Iowa-based vendors. She expressed concern about the blanket approval for $500,000.
Commissioner Burkhart made a motion to approve the contract with Made Simple in the amount necessary for the first continuity program in February 2023, and for any additional purchases to come back before the Commission. Commissioner Campbell seconded the motion, which carried unanimously.
Commissioner Burkhart moved to approve the contracts with Performance Food Service and Quest Software, Inc. as presented. Commissioner Campbell seconded the motion, which carried unanimously.
Grand Falls Casino Resort, LLC: Sharon Haselhoff, General Manager, presented the following contracts for Commission approval:
- Doll Distributing – Beverage Purchases
- Johnson Brothers – Beverage Purchases
- MedOne Healthcare Systems – Health Plan Costs
Hearing no comments or questions, Chair Andres requested a motion. Commissioner Olsen moved to approve the contacts as submitted by Grand Falls Casino Resort, LLC. Commissioner Horbach seconded the motion, which carried unanimously.
IOC Black Hawk County, Inc.: Mr. Moine presented the following contracts for Commission approval:
- Aspro – Asphalt Production and Paving Service
- Woodruff Construction – General Contractor
- Criterion Manufacturing – Warehouse Lease Agreement
Hearing no comments or questions, Chair Andres requested a motion. Commissioner Burkhart moved to approve the contracts as submitted by IOC Black Hawk County, Inc. Commissioner Horbach seconded the motion, which carried unanimously.
IOWA WEST RACING ASSOCIATION (IWRA) D/B/A HORSESHOE CASINO COUNCIL BLUFFS:
Application for a Pari-Mutuel License, Racetrack Enclosure Gambling License and Sports Wagering License for January 1, 2023 through December 31, 2023: Ms. Mainwaring requested renewal of the license for Horseshoe Casino Council Bluffs, noting they are an important employer and tourist destination. She advised IWRA has invested heavily in the area of the MidAmerica Center, noting it is gaming revenue that has allowed them to do so. She stated Horseshoe Casino is an important anchor for continued success at the MidAmerica Center.
Mr. Roberts stated Horseshoe Casino is excited to continue to work with IWRA and providing an additional $75,000 investment in the community. When Eldorado purchased Caesars in 2021, they made a commitment to develop and bring in new product. Since the purchase, approximately $13.5 million has been invested in the hotel, casino floor and property infrastructure. The property has also focused on improving the racing experience in the last two years, noting there is approximately $5 million in handle that comes from Nebraska. The video wall for the daily races was replaced, they added seven additional kiosks on the floor, and are in the process of moving the sports wagering area in to the Whiskey Roadhouse space. This will allow them to give the current sports wagering area more of a race book feel and just have the monitors for the horsemen to enhance that business. They offer a robust thoroughbred racing wagering menu with 70 tracks currently approved for simulcast and will offer additional tracks as dates are announced. Caesars employs a corporate Director of Racing, who personally reaches out to VIP players. Mr. Roberts stated they market separately for horse racing for the Preakness and Belmont Stakes, and have an agreement with Prairie Meadows to simulcast their races as well.
Commissioner Olsen noted the greyhound track has to be dealt with at some point, and inquired if there are any thoughts or plans for that area of the property. Mr. Roberts stated they are continuing to look for people from an investment standpoint that would come in and develop the area. He stated they don’t want to duplicate entertainment options that are already available in the area.
Ms. Mainwaring advised the property is leased back to IWRA, and they have the right to approve whatever would go in the space. She stated there have been multiple discussions regarding the development of the racetrack area. She stated IWRA is excited to do something different with that area of the property.
Hearing no further comments or questions, Chair Andres requested a motion. Commissioner Olsen moved to approve Iowa West Racing Association’s Application for a Pari-Mutuel License, Racetrack Enclosure License and Sports Wagering License for January 1, 2023 through December 31, 2023 with the following conditions:
- Staff be provided with an accurate and updated list of all signals being taken by the simulcast venue on an ongoing basis.
- Import contracts continue to be available on demand to staff to ensure regulatory compliance.
Commissioner Campbell seconded the motion, which carried unanimously.
Contracts: Mr. Roberts presented the following contracts for Commission approval and gave a brief description of each:
- AJR Equities – Promotional Products
- AT&T – Wi-Fi Provider
- J & R Liquors – Liquor Purchases
- Sun Country Airlines – Airline
- Wojo Tours and Travel (Thomas Wojnowiak) – Tour Operator (OSV)
Hearing no comments or questions, Chair Andres requested a motion. Commissioner Campbell moved to approve the contracts as submitted by Iowa West Racing Association d/b/a Horseshoe Casino Council Bluffs. Commissioner Horbach seconded the motion, which carried unanimously.
PRAIRIE MEADOWS RACETRACK AND CASINO, INC. d/b/a PRAIRIE MEADOWS RACETRACK AND CASINO:
Application for Pari-Mutuel License and Granting of Race Dates; Racetrack Enclosure Gambling License, and Sport Wagering License for January 1, 2023 through December 31, 2023: Gary Palmer and Derron Heldt, General Manager and Vice President of Racing, were present to address the agenda item. Mr. Palmer requested approval of the license renewal application for the pari-mutuel, gaming and sports wagering licenses. He stated things are going well, noting 2021 was the best year the facility had ever had and 2022 is going better than last year. He stated they have started a $13 million remodel on the hotel, will spend another $1 million to paint the outside of the facility, and are working to replace all of the escalators in the facility at an approximate cost of $2 million. Mr. Palmer stated PMRC is able to continue to invest in the community with grants, and reinvest in the facility and their employees.
Mr. Heldt stated the horsemen and PMRC have agreed on the race date calendar before the Commission. He advised the parties have also agreed to make up race dates if a date has to be cancelled. There are a couple of Thursdays in the months of June, August and September on which races could be held to make up cancelled race dates.
Commissioner Olsen asked if there is a signed agreement in place with the horsemen. Mr. Heldt stated the parties have an agreement on the race calendar, but there is no signed contractual agreement with the horsemen. He stated the parties are still engaged in negotiations; they pretty much agree on everything within the contract except the length of the contract. PMRC is looking for a one-year contract, and the horsemen want a 3-5-year contract. Mr. Heldt noted the Commission is looking at having a study done on racing in Iowa and PMRC feels it would be prudent to have a one-year agreement to be able to take any results of the study into consideration.
Commissioner Olsen asked Mr. Ohorilko if it was appropriate for the Commission to approve the license renewal without a signed agreement between the horsemen and PMRC. Mr. Ohorilko stated it is the Commission’s administrative responsibility to approve the licenses and race dates; therefore, it is not necessary for a signed contract to be in place if the Commission does not have an issue with the race dates. He noted the race dates are typically a component of the contract; and suggested it would be prudent to hear from the horsemen representative regarding the race dates.
Commissioner Campbell inquired as to the typical length of the contract. Mr. Heldt advised the current contract was for one year, but would continue on a year-to-year basis for three consecutive years provided all parties agreed by June 30th for the next racing season, which did not occur this year. Meetings were held with the President of the Iowa HBPA and Iowa Quarter Horse Racing Association in July and August. Mr. Heldt reiterated the parties agree on everything in the contract except the length.
Chair Andres called on Jon Moss, Executive Director of the Iowa Horsemen’s Benevolent Protective Association (IHBPA). Mr. Moss stated the parties have agreed to 80 days of racing, and concurred with Mr. Ohorilko’s statement that the dates are a component of the overall contract. He stated the parties are very close to reaching an agreement.
Commissioner Horbach asked if the IHBPA was supportive of the study. Mr. Moss answered in the affirmative. Commissioner Horbach asked if it would be prudent to use the data obtained from the study to base future strategies on. He stated he was trying to determine the value of a 5-year contract against the importance of the study. He wondered why the IHBPA would want to commit to a 5-year agreement if they feel the study is important. Commissioner Horbach wondered if they questioned how realistic the data received from the study would be.
Mr. Moss stated the industry is looking at a couple of different issues, one being to bring stability to the breeders in Iowa. He stated the 80-84 days of racing has broadened the opportunities for the Iowa breeders, and the ITBOA sale almost doubled this year. The long-term stability allows the horsemen to invest in product due to the number of race days. Mr. Moss stated the length of the contract does not have anything to do with the results of the study.
Commissioner Horbach stated he supported Mr. Moss’ statements, and understands the necessity of stability for the breeders. He stated his comments were to give everyone something to think about as he feels there are more issues than just the length of the contract related to business strategies and stability for the breeders.
Chair Andres called on Tom Lepic, Executive Director of the Iowa Quarter Horse Racing Association (IQHRA), who reiterated the importance of the length of the contract for breeding purposes. In terms of what happened five years ago, six new quarter horse stallions have come to Iowa, and the IQHRA believes they will have the largest crop of weanlings born in Iowa this year. The Iowa-bred program is not only based on Iowa-bred horses, but also on Iowa stallion foals. Mr. Lepic stated there are a number of horses that come to Iowa from around the country to breed here. This new crop will not only be Iowa-bred but Iowa stallion-bred. The stallions stayed in Iowa as the owners knew there was going to be an extension of racing for the long-term. Mr. Lepic expressed his appreciation to the Commission for looking to see how the program can be improved, and that the industry calls held earlier this year were very important. He stated he feels the results of the study will be extremely important for the contract.
Mr. Lepic stated he just returned from a trip to Oklahoma where he talked with trainers. He noted the quarter horses were allotted 416 stalls at PMRC this year and did not come close to filling them. Mr. Lepic advised the field size for this year will average 6.7 horses per race, which is not acceptable. Increased field sizes was one of the reasons given to the Commission when the idea of a mixed meet was first brought forward. The IQHRA felt the mixed meet would help them bring in more horses and trainers which would increase the field size. Mr. Lepic reiterated the term of the contract is important so that the horsemen know that racing is here for the long term. He stated everyone is working together to resolve the issues.
Commissioner Olsen asked how many race days were in the just completed race meet. Mr. Heldt advised there were 84. Commissioner Olsen noted there are only 80 days of racing next year.
Commissioner Burkhart stated she had concerns about approving the race dates without a contract, but feels everyone is in agreement on the race days for 2023. She asked Mr. Ohorilko if that was his understanding. Mr. Ohorilko answered in the affirmative based on the previous comments.
Commissioner Olsen noted racing fatigue sets in for the horsemen and PMRC racing staff by the end of the race meet, but felt the parties should make coming to an agreement on a contract a priority.
Mr. Moss noted the implementation of HISA created a number of issues during the race meet. He stated he took Commissioner Olsen’s comments to heart.
Commissioner Olsen expressed his hope that the contract would not be an issue during the license renewal process next year.
Chair Andres noted part of the Commission’s concerns also centered around marketing.
Commissioner Burkhart noted that during the industry meetings earlier this year, everyone stated it was difficult to move forward with some of the marketing initiatives due to a lack of lead time, and the horsemen were asking for more marketing on the part of PMRC. She stated if the Commission defers the license renewal due to the lack of a signed contract, it only makes the problem worse as the Commission does not meet again until November.
Commissioner Burkhart moved to approve Prairie Meadows Racetrack & Casino, Inc.’s Application for Pari-Mutuel License, Racetrack Enclosure License and Sports Wagering License for January 1, 2023 through December 31, 2023, grant race dates as submitted in the application, and approve the revised security plan included in the application with the following conditions:
- The exports contracts must continue to have the review and approval by staff to ensure regulatory compliance.
- The import contracts must continue to be available on demand to staff to ensure regulatory compliance.
- All marketing promotions that may affect live racing, particularly the racing schedule and post times, shall have prior approval from the IRGC.
Commissioner Campbell seconded the motion, which carried unanimously.
Recap of Race Meet: Mr. Heldt stated races were held on Thursday, Friday, Saturday and Sunday; they raced 80 days out of the 84 scheduled for the racing season. Thoroughbred handle on track was flat, while off-track handle is approximately $7.6 million to date with $4.7 million due to a mandatory carryover on the Pick 5 bet. Mr. Heldt advised 33 fewer races have been run on the thoroughbred side so handle is down approximately $800,000 off-track. With regard to field size, Mr. Heldt stated thoroughbreds field size is up slightly to 6.5 horses from 6.44; for quarter horses, the field size is down from 6.9 horses per race last year to 6.5 this year.
Mr. Heldt stated some race days were cancelled. There were two consecutive Saturdays where the thoroughbred race program was cancelled, however, the quarter horses ran. Races on the first Saturday were cancelled due to track conditions as the jockeys did not feel the racetrack was safe to ride on, and the following Saturday, there were thunderstorms with lightning. They waited about 1.5 hours to see if the weather would clear before calling off the races.
Accomplishments: Mr. Heldt stated HISA was implemented on July 1st. He noted PMRC started working with HISA about a year ago to put together an application; an inspection team came to the racetrack in May and reviewed multiple aspects of the track’s operations and policies to make sure everything complied with HISA regulations. The inspection team approved PMRC’s plan. He stated there have been various issues and extra considerations with the implementation of HISA.
Highlights of the thoroughbred season: PMRC holds the Festival of Racing in July of each year, which includes stakes races where horses from around the country come to race at PMRC. This year there were two Iowa-bred horses. The Iowa Derby was won by a horse named “Ain’t Life Grand”, who is owned by local Iowans and trained by Kelly Von Hemel. This horse went on to race in the Travers Stakes, which is considered a mid-summer derby. Additional horses in the race included horses that ran in the Kentucky Derby and Preakness. This horse will be returning to Iowa to race in the Iowa Classic races to held this coming Saturday. Additionally, Tyler’s Tribe, owned by Mr. Lepic, has raced four times at PMRC and is undefeated; Tyler’s Tribe is considered one of the top 2-year old quarter horses in the country. If Tyler’s Tribe wins the race and is in good condition, Mr. Heldt stated he thought the plan was to enter him into the Breeder’s Cup, which is run in November, and includes some of the best horses in the country. Mr. Heldt advised the quarter horse Challenge Races will be held at Horseshoe in Indianapolis on October 22nd.
Mr. Heldt touched briefly on the ITBOA Sale, noting the gross receipts were approximately $810,000. This was the best sale they have ever had. One horse sold for $60,000 and two others hit the set sale price, and a couple of others brought between $30,000 and $40,000. The breeders are breeding good horses with good pedigrees and conformation.
He reiterated the jockeys declined to ride one evening as they felt the surface was uneven along the inside rail. Since that occurrence, Mr. Heldt advised he has met with the thoroughbred horsemen and jockeys on the racetrack so he could see the areas of concern. Following the meeting, a plan has been put in place to make changes/corrections along the inside rail this fall so the track is ready for racing next spring.
Commissioner Burkhart asked what the crowd was like on the two stormy Saturdays that racing was canceled. Mr. Heldt advised the crowd was light as storms were anticipated; one was a soaking rain for most of the day, and the other the forecasters predicted the storms would move through, but the storms kept rebuilding and there were numerous lightning strikes.
Commissioner Burkhart asked how many of the 33 races cancelled were due to the two Saturdays. Mr. Heldt stated there were six or seven race programs cancelled; they tried to make up races this past Sunday; there were 14 races instead of the normal 10. They are also running an additional race on Saturday to make 13, running 7 races today and 11 races tomorrow.
Commissioner Burkhart asked about the cause behind the other cancelled races. Mr. Heldt advised it was due to field size.
Commissioner Horbach, noting the jockeys refused to ride previously as they didn’t feel the track was safe, asked if that created a liability issue for the races on Saturday. Mr. Heldt advised the track was fine on the Sunday immediately following the Saturday when races were cancelled. There was sun and some wind, and the track was harrowed several times, which allowed it to dry. Commissioner Horbach noted there is no rain in the next few days. Mr. Heldt stated this was one of the reasons additional racing days were being built into the race schedule. Commissioner Horbach thanked Mr. Heldt and the racing staff for meeting with the jockeys.
Contracts: Mr. Palmer presented the following contracts for Commission approval:
- Control Installations of Iowa (Basepoint) – Surveillance and HVAC Equipment
- Harms Oil – Fuel Purchases
- Nestle USA (Starbucks) – Starbucks Coffee
Hearing no comments or questions, Chair Andres requested a motion. Commissioner Burkhart moved to approve the contracts as submitted by PMRC. Commissioner Campbell seconded the motion, which carried unanimously.
BetMGM LLC: Mr. Ohorilko advised Commission staff and BetMGM LLC have entered into a Stipulated Agreement regarding a violation of Iowa Code § 99F.9(7) related to the use of a credit card to wager. This incident involves prepaid debit cards and is the same type of incident from previous stipulations that have come before the Commission in July and August. It involves the use of prepaid debit cards purchased with a credit card. In this situation, the timeframe is January 5, 2021 through July 22, 202; the provider for BetMGM allowed 911 credit card transactions totaling $266,878. Mr. Ohorilko stated BetMGM has acknowledged this constitutes a violation of Iowa Code § 99F.9(7) and has agreed to pay an administrative penalty up to $60,000.
Sarah Brennan, Senior Director of Compliance for BetMGM, thanked the Commission for providing the opportunity to explain what steps BetMGM has taken internally, operationally and in coordination with Sightline to prevent a reoccurrence of this violation. She advised she has been with the company since they launched in Iowa, and has seen a tremendous growth in the Compliance Department, which shows their dedication to regulatory compliance not only in Iowa but all jurisdictions. Ms. Brennan stated BetMGM is dedicated to regulatory compliance and adherence to rules, statutes, laws, their partnership with Diamond Jo Worth, and the protection of patrons both from the responsible gambling perspective and consumer protection. She stated it is their obligation as a licensee to uphold the regulatory requirements of operating in Iowa and they take responsibility for what occurred even though it was the result of an issue with their payment provider and vendor. Ms. Brennan stated BetMGM took significant action after being notified of the situation in July to correct internal operational risks that could potentially lead to another violation; they did a wholesale audit of their operations across multiple teams. The approved controls as of January 4th when BetMGM launched prohibited the use of credit; the wording was changed to expressly prohibit the use of credit cards and prepaid debit cards and clarifying debit card only. Additional specific language was added to the cashiers’ page to indicate that credit cards are prohibited in Iowa and an overlay specifying debit cards only so there is no misunderstanding by patrons on the payment resources available to make a deposit. Ms. Brennan stated the User Account Testing team has enhanced their process with the cashier team to conduct ongoing audits of the cashiers against deposit methods to ensure that credit cards are blocked. She stated they have communicated directly with Sightline regarding their contractual obligation to adhere to the regulatory prohibition against credit card use. She advised she was aware Sightline had enhanced their processes as well to ensure credit card transactions were declined. Ms. Brennan advised representatives from Sightline were present. Ms. Brennan noted there was a subsequent inquiry from IRGC to conduct another audit; she confirmed there have been no further credit card transactions from July 2021 through today in Iowa.
Andrew Crowe and Jennifer Carleton, Sr. Vice President of Business Development and Legal Counsel respectively for Sightline, were present to address this issue. Mr. Crowe stated they wanted to attend in person to support their partner and ensure the Commission knows Sightline understands the importance of this issue and took it seriously. He stated their product is not a card that can be purchased with a credit card; they are linked to a PayPal account where a registered player confirms their identity and age. Once an account is opened, it can be funded with a debit card, PayPal, bank transfers, etc. and this is where the controls from Sightline come into play. Mr. Crowe stated Sightline relies on the first six digits on the card, known as a Bank Identification Number (BIN), which identify the network as a Visa, Mastercard, or Discover, the bank that issued the card, and the type of card. Sightline relies on some of the filters on their bank processor’s platform, WorldPay, to go through and review each BIN for every card that is processed and block the credit card transactions. In this instance, it was a failure on the WorldPay platform; Mr. Crowe acknowledged Sightline is accountable for that oversight. Once the issue was discovered, Sightline immediately cut off all credit card funding, and identified the specific issue on the WorldPay platform within three days and had the code changed so that credit card payments were no longer accepted. Mr. Crowe advised there was a process and audit being performed on a monthly basis with WorldPay that is now being done on a daily basis to ensure that credit cards are no longer being processed. He stated Sightline put in a secondary control, and have incorporated the BIN table into their system and have a record of what each BIN represents allowing them to review every card presented as a form of payment. Mr. Crowe acknowledged it will take time for Sightline to restore their trust with the Commission, but noted their decades of payment experience in the gaming space.
Commissioner Horbach expressed his appreciation for the explanation as it helped explain the real issue. He asked if the Commission’s licensee has a hold harmless agreement with Sightline for the negligence of WorldPay.
Ms. Carleton advised Sightline has an agreement with the licensees to absorb all fees related to this incident. She stated they have a secondary agreement with WorldPay related to this situation as well given their culpability in this matter. She stated Sightline would be taking full responsibility financially for any administrative penalties assessed. Ms. Carleton noted one of the questions from staff was why WorldPay, as a direct acquirer for other types of funding methods, didn’t have the same issue. She advised it was because Sightline has a two-step coding process, and the second step was the result of human error as WorldPay miscoded all of Sightline’s MCC codes creating a problem for them but not any of the other entities for which they perform acquiring functions. She reiterated that Sightline no longer relies solely on reports from WorldPay.
Commissioner Olsen asked if a representative from WorldPay was in attendance. Mr. Crowe advised WorldPay was not in attendance. He stated Sightline came down hard on WorldPay and is looking at alternatives to WorldPay.
Commissioner Burkhart noted there are three hearings dealing with the same issue today and two previously, all stemming from the same timeframe. Mr. Ohorilko indicated that was correct, and advised there are two more pending. Commissioner Burkhart stated she felt it was important point of clarification for the public and industry to understand that this is not an ongoing situation; the timing and availability of individuals is why these are still coming before the Commission. Mr. Ohorilko indicated that was correct, and confirmed that all licensees working with Sightline addressed the Commission’s concerns promptly. Staff has been satisfied with the results of the audits. He feels this was an isolated situation and the first time the Commission has dealt with the use of a credit card in sports wagering since 2019. He does not think it is a systemic issue within the state.
Ms. Carleton indicated it was one incident and they self-reported to the Commission and identified all of the operators that were affected. She agreed that it has been a long process in finalizing the agreements and fines, but concurred all are related to the same incident and timeframe.
Hearing no further comments or questions, Chair Andres requested a motion. Commissioner Burkhart moved to approve the Stipulated Agreement with BetMGM, LLC with an administrative penalty of $60,000. Commissioner Campbell seconded the motion, which carried unanimously.
SCE Partners, LLC: Mr. Ohorilko advised Commission staff and SCE Partners, LLC, which operates the Hard Rock Sportsbook, have entered into a Stipulated Agreement for a violation of Iowa Code § 99F.9(7), relating to the use of credit to wager. He stated the main difference between this violation and the previous one is the volume of transactions that occurred. Hard Rock Sportsbook accepted 73 credit card transactions amounting to $15,044. Mr. Ohorilko advised the proposed administrative penalty is up to $20,000.
Mr. Fisher stated they did have an agreement that both parties were responsible for their subcontractors to follow regulations. He stated they have requested and implemented double checks from Sightline to ensure no credit transactions have been accepted. With IRGC’s guidance, Hard Rock Sportsbook has required Sightline to no longer accept prepaid debit cards as a form of payment.
Hearing no further questions or comments, Chair Andres requested a motion. Commissioner Olsen moved to approve the Stipulated Agreement with an administrative penalty of $20,000. Commissioner Campbell seconded the motion, which carried unanimously.
Elite Hospitality Group, LLC: Mr. Ohorilko advised Commission staff and Elite Hospitality Group, LLC, which operates ELITE Sportsbook, have entered into a Stipulated Agreement for a violation of Iowa Code § 99F.9(7) relating to the use of credit to place a wager. He noted this violation is related to the same incident that occurred from February to July 2021. ELITE Sportsbook accepted 991 credit card transactions totaling $192,930. As a result of the violation, Elite Hospitality Group, LLC has agreed to an administrative penalty up to $60,000.
Mr. John advised Elite Hospitality Group, LLC has been doing business as ELITE Sportsbook since August 2019, and are aware it is a privilege to conduct sportsbook wagering in Iowa, and take the matter seriously. He stated they have worked closely with Sightline, their third-party payment provider, and were explicit that gambling on credit in the State of Iowa is not allowed and that all credit card transactions must be blocked. Prior to offering their first wagers, they tested credit card deposits and found the system to be in compliance. They were not aware that credit cards had been used to make wagers on their platform until the matter was brought to their attention by the Commission in early February 2020. In addition to the mitigation measures described by Mr. Crowe from Sightline, ELITE Sportsbook has been performing their own independent testing by attempting to place deposits with various credit card providers to ensure that credit cards fail as intended.
Hearing no further comments or questions, Chair Andres requested a motion. Commissioner Horbach moved to approve the Stipulated Agreement with Elite Hospitality Group, LLC for a violation of Iowa Code § 99F.9(7) with an administrative penalty of $60,000. Commissioner Campbell seconded the motion, which carried unanimously.
Fubo Gaming, Inc.: Mr. Ohorilko advised Commission staff and Fubo Gaming, Inc. have entered into a Stipulated Agreement as a result of a two-count violation of Iowa Code § 99F.4(22) relating to the statewide self-exclusion program, and Administrative Rule 491 IAC 13.3(1) related to authorized sporting events. With regard to Count I, two individuals on the statewide self-exclusion program were allowed to open an account. One individual did place wagers but the triggering element with regard to the Resolution is that promotional mailings were sent to both individuals. Mr. Ohorilko advised this is Fubo’s first incident in the last 365 days. He stated Fubo has agreed to an administrative penalty between $5,000 and $20,000 for Count 1 consistent with the Resolution.
For Count II, Mr. Ohorilko stated Fubo Gaming, Inc. accepted three wagers between January 13 and February 5, 2022 for “Super Bowl 56 – MVP”, which is not authorized under Iowa law. The wagers were subsequently settled. He stated Fubo Gaming, Inc. has agreed to an administrative penalty up to $5,000 for this count.
Steve Brody, Assistant General Counsel, stated Fubo takes this matter very seriously. They conducted a comprehensive investigation and have implemented remedial measures to prevent future violations. He noted Fubo has a robust compliance program, which includes routine and substantive compliance meetings, trainings for all employees, internal and external audits, weekly meetings across all gaming departments with their internal compliance professionals, and an internal compliance team. Mr. Brody stated Fubo understands the importance of the statewide self-exclusion program, and in addition to remedying the underlying cause, they have implemented redundant measures designed to fortify their platform’s ability to prevent individuals on the statewide self-exclusion list from wagering on Fubo. Mr. Brody stated au automated email is sent on a daily basis from the sportsbook platform to notify the compliance team members and legal team if a relevant self-exclusion form has been found and processed. Fubo performs an automated scrub of the statewide self-exclusion list on a daily basis as a secondary measure. He stated they are working with the Conner Group, an outside auditor, to conduct a review of Fubo’s internal audit functions to ensure that the daily review from the automated system is working as it should.
Hearing no comments or questions, Chair Andres requested a motion. Commissioner Campbell moved to approve the Stipulated Agreement with an administrative penalty of $5,000 for Count 1 and $5,000 for Count II. Commissioner Olsen seconded the motion, which carried unanimously.
Unibet Iowa LLC: Mr. Ohorilko advised that Commission staff and Unibet Iowa, LLC have entered into a Stipulated Agreement for a violation of Iowa Code § 99F.4(22) related to the statewide self-exclusion program. From September 1, 2021 until January 20, 2022, Unibet failed to download self-exclusions from the statewide self-exclusion database every seven days as required. There were individuals that signed up for accounts and were able to make deposits and wagers. Mr. Ohorilko stated this is the first violation of this nature in the last 365 days. They have agreed to an administrative penalty between $5,000 and $20,000 consistent with the Resolution for these types of violations.
Liv Biesemans, Deputy General Counsel for Unibet Iowa, stated they take full responsibility and accountability for the incident and have put a mitigation plan in action. She advised staff has received training from IRGC staff, which they found extremely helpful. They have also hired a Responsible Gaming Manager who is dedicated to managing and scrubbing their database in addition to the Operations Manager to ensure their database is fully checked and scrubbed going forward. Ms. Busemans indicated this was an isolated incident and the first time it has occurred in any jurisdiction.
Hearing no comments or questions, Chair Andres requested a motion. Commissioner Burkhart moved to approve the Stipulated Agreement with an administrative penalty of $5,000. Commissioner Campbell seconded the motion, which carried unanimously.
PUBLIC COMMENT/ADMINISTRATIVE BUSINESS: As there was no Public Comment, Chair Andres moved to Administrative Business. Mr. Ohorilko advised he would take the two items under Administrative Business together. These items pertain to a discussion and potential action regarding recent violations of credit card statutes and regulations and the Resolution involving the statewide self-exclusion program. He noted the Resolutions were included in their meeting packets as well as the Public Viewing packet. He stated the Resolutions have been in place in Iowa since 2006 and 2008 respectively with some changes to the self-exclusion Resolution in 2017. There has been an uptick in violations in the past couple of years, and wanted to provide the Commissioners an opportunity for a discussion to see if the current Resolutions for these areas are satisfactory in serving as a deterrent for any violations that may be occurring.
Commissioner Burkhart noted the Commissioners had requested staff to look at the penalties handed out in surrounding states for similar violations and some information was provided in their meeting packets but was wondering if that work was still ongoing. She stated it was difficult to ascertain how Iowa compared to some of the other states. Mr. Ohorilko indicated that was correct. He stated staff does not have a comprehensive list from other states, but feels he will have that information soon from jurisdictions that are of like size and regulatory philosophy.
Commissioner Olsen stated this was an area the Commission was interested in pursuing as there has been no change for a considerable amount of time, and requested staff continue to gather information so the Commission could take action at the next meeting.
RULES: Mr. Ohorilko stated the rule package before the Commission was being submitted under Notice of Intended Action. The 24 items include various modifications of rules that are not related to the legislative package that was presented in August. Items included are the result of meetings of the Racing Task Force, recommendations from staff, and recommendations from the industry throughout the year. There have been some clarifications as a result of questions received from the industry. Mr. Ohorilko advised the package was sent to the industry earlier this month, and staff did receive some comments back from the sports companies that arrived after the agenda had been published. He stated there may be some minute changes in the package when it comes back before the Commission, but he would highlight those changes. Additional comments were received related to Item 11, the rule relating to cashless gaming. Mr. Ohorilko stated the rule before the Commission is not the one that was sent to the industry. He stated staff has tried to simplify the language based on those comments by striking the requirement for cashless wagering accounts to occur away from the gaming floor. The law now provides for a mechanism to use cashless wagering. Prior to the law being in place, there were rules that allowed cashless wagering but off the gaming floor. Staff felt some of the comments received from the industry made changes to policies, and some were inconsistent with the statute. Mr. Ohorilko stated he has not received any comments since the rules were published. He stated he had received a letter regarding the rule raising the administrative penalty level for the Gaming Board. The maximum fine would increase from $1,000 to $3,000. The rule would allow the Gaming Board to issue administrative penalties up to that amount; however, not every fine issued would be at that amount. Mr. Ohorilko noted the letter received from the Iowa Gaming Association (IGA) has been shared with the Commissioners. He advised there is an alternative proposal the industry is asking the Commission to consider.
Wes Ehrecke, Executive Director of the IGA, stated members expressed concern with the language that the Gaming Board may impose fines up to $3,000 as the current rule states they may impose fines up to $1,000 and that the majority of fines being issued by the Gaming Board are for $1,000. He asked for some transparency and structure as to what factors would determine the amount of the fine should the amount of the fines issued by the Gaming Board be increased to $3,000. He pointed out that the casinos have extensive protocols and training in place; however, human error does occur and they understand the need for a fine. They do question the need to triple the fine from $1,000 to $3,000 and questioned what the Commission is hoping to accomplish with the increase. Mr. Ehrecke stated the members would have appreciated having a discussion on this issue prior to the rule being submitted for consideration. He reiterated his statement that a majority of the fines handed out by the Gaming Board are for $1,000 and wondered what is going to change if the same infractions are fined at $3,000. Mr. Ehrecke noted that in reviewing the infractions from the last year with Mr. Ohorilko, there were 162 fines levied and 50% were for underage violations. He suggested the following compromise for this particular category: Up to $1,000 for the first reported minor infraction; Up to $2,000 for the second, and up to $3,000 for the third in a calendar year. Mr. Ehrecke stated he believes the ceiling will become the floor if the minimum fine is raised as that is what is occurring currently. He stated the ideal solution would be to remove the proposed rule entirely, but if that isn’t an option, then the parties should look at a compromise instead of tripling the fine in every category.
Commissioner Olsen asked Mr. Ohorilko the last time the level of fine the Gaming Board could issue was changed. Mr. Ohorilko advised it was in 1990. Commissioner Olsen stated the Commission had to do something based on the length of time and inflation. He stated the industry is fortunate there has not been a change since 1990; however, with the uptick in violations, the Commission feels the issue needs to be addressed.
Mr. Ehrecke reiterated that human error does happen, and the members will now be fined more for the same infraction. He noted the current rule states the Gaming Board can issue an administrative penalty up to $1,000, but feels all rulings are being issued with a $1,000 administrative penalty. He stated some of the infractions are minor and should be assessed a lower administrative penalty. He asked where the IGA could obtain the information to discuss the levels of fines assessed for the various infractions. He reiterated his belief that all Gaming Board rulings would be issued with the maximum penalty allowed.
Chair Andres stated the $1,000 amount does not leave much room to decrease the assessed penalty.
Commissioner Campbell asked Mr. Ohorilko to explain what is the lowest level of infraction reviewed by the Gaming Board, and whether those could come before the Commission.
Mr. Ohorilko stated the proposed increase is not an increase in the Commission’s ability to fine more. The Commission has deferred the responsibility for certain types of administrative infractions to the Gaming Board. If the Gaming Board feels the situation is egregious or they are not seeing compliance, they could refer the matter to the Commission for review and action. He stated the Gaming Board still has oversite by the Commission; the industry does not have to agree to anything. The industry has the ability to appeal the decision to an Administrative Law Judge, which would then come back to the Commission.
Commissioner Burkhart stated the reasoning behind the tripling is the level of infractions that are coming before the Commission. She asked Mr. Ehrecke why the IGA members are seeing more infractions and the reasoning behind that.
Mr. Ehrecke stated it is human error, which will always exist. There is no guarantee a larger fine would accomplish anything. He stated they don’t dispute the need for a fine, they just question the need to triple the maximum amount. He again requested consideration of the compromise set forth earlier.
Commissioner Horbach stated he has experienced where the “up to” becomes the cap for everything. He asked Mr. Ehrecke if he felt it was appropriate for the Gaming Board to only be able to assess a $1,000 administrative penalty for the most egregious infractions.
Mr. Ehrecke stated he did not know what was appropriate, but is trying to find a way to have a discussion on the issue to get various questions answered before the rule is approved.
Commissioner Horbach noted that Mr. Ehrecke has been a lobbyist at the Capitol for a long time, and knows that language starts one way, and then swings the opposite way. He stated the discussion does not end with the proposed rule. Commissioner Horbach stated he is willing to consider the compromise offered by Mr. Ehrecke as long as there is some latitude for the most egregious infractions. He expressed his surprise that this proposal was being put forward when the penalty amount has not been increased since 1990 and there is no purpose other than making the dollar amount consistent with inflation over the years. Commissioner Horbach commented on the resources being utilized over a $1,000 penalty when the Commission just handed out $60,000 penalties. He stated he was willing to continue to have a discussion on this matter, but feels the dollar amount is appropriate based on inflation and intent. He stated there should be a cap at the bottom as well as the top. He suggested “unless deemed egregious by the Gaming Board or Commission” could be added to the rule language.
Mr. Ehrecke stated he always believed that was a given; that the Commission has the latitude in any situation to assess a higher administrative penalty. He again expressed concern about the ceiling becoming the floor.
Chair Andres noted the wording has always been “up to”, but if it stays there for 30 years, the “up to” amount becomes ridiculous. She stated the lower levels are still in play as the wording is “up to $3,000.”
Commissioner Olsen noted the Commission had the ability during the hearings today to go up to $20,000 on several of the situations and did not do so when it is was the first violation. He asked if the Commission could ask staff to establish some type of protocol.
Mr. Ohorilko answered in the affirmative. He advised there are some draft schedules in place, but did not want to be presumptuous as to what would happen. He stated staff is prepared to have discussions with the industry, not just on underage gambling but all violations. He stated there are informal schedules for any type of violation. Mr. Ohorilko stated that Jeff Peterzalek, legal counsel to the Commission, always reminds them that lack of discretion is not abuse of discretion. He stated it is important to have the dialogue, but is not sure if it is something that is appropriate to be incorporated in the rule. If the parties want something more formal, it could be in the form of a Resolution that the Commission would adopt with the understanding that the rule language would be similar to what is before the Commission at this time.
Commissioner Horbach asked if the Commission could issue a directive to the Gaming Board that they want the administrative penalty used as a discretionary tool, and it is not the Commission’s intent to make the $3,000 the cap. Mr. Ohorilko stated that would be a good idea. He indicated staff would get some draft schedules prepared and work with Mr. Ehrecke as the rules go through the process.
Commissioner Horbach stated there is one area where everyone agrees, and that is no one wants the $3,000 to be the floor. He asked if there is some way for the Commission to express their intent in a motion.
Mr. Ohorilko stated he felt it would be appropriate to approve the rules under Notice of Intended Action, and direct staff to have conversations with the Iowa Gaming Association regarding a schedule that is consistent with this discussion.
Commissioner Campbell moved to approve the rules as submitted under Notice of Intended Action, and direct staff to work on a schedule so that the $3,000 administrative penalty does not become the floor and to work with the Iowa Gaming Association to develop a matrix for staff to address compliance issues. Commissioner Olsen seconded the motion, which carried unanimously.
ADDITIONAL ANNOUNCEMENTS: Mr. Ohorilko advised the budget has been closed for FY 22; the reversion amount to the industry is $322,192.27. He stated a schedule would be sent to the industry setting out the specific dollar amount that will be credited to each facility.
Mr. Ohorilko stated there was some financing approved for Riverside Casino and Golf Resort, Inc. at the August Commission meeting contingent upon restrictive language being removed from the financing document. He advised the language has been removed and there were no adverse effects to the licensee due to the removal of the restrictive language.
ADJOURN: Hearing no further business to come before the Commission, Chair Andres adjourned the meeting.