NIL collective defends casino partnership as gambling under scrutiny

The Iowa Division of Criminal Investigation, Special Enforcement Operations Bureau is currently conducting a sports wagering investigation that involves “individuals affiliated with” Iowa and Iowa State, according to the Iowa Racing and Gaming Commission (IRGC). The University of Iowa announced Monday that it has received information about 111 individuals, including 26 current athletes and one full-time athletic department employee.

There are currently at least three NCAA Division I institutions – the two in-state rivals Iowa and Iowa State, plus Alabama – where current athletes or a former head coach are under scrutiny amid investigations related to potential sports gambling-related crimes or NCAA violations.

However, the investigation involving individuals affiliated with Iowa and Iowa State potentially stands in contrast with the one involving Alabama, based on the news release from the IRGC.

Alabama fired former baseball coach Brad Bohannon days after the Ohio Casino Control Commission prohibited the acceptance of wagers involving Alabama baseball. Bohannon was reportedly in communication with a bettor who allegedly placed suspicious wagers at the BetMGM Sportsbook at Great American Ball Park, which is home to the Cincinnati Reds.

“The IRGC does not currently have any information that would call into question the integrity of any sports wagering contest or event involving the University of Iowa or Iowa State University,” the IRGC said Tuesday in a news release.

An IRGC spokesperson referred On3 to its news release in response to a request for comment.

The series of recent news reports and announcements regarding potential sports gambling-related impropriety show the risks and potential conflicts of interest of gambling sponsorships within the college athletics ecosystem.

Elite Casino Resorts is ‘exclusive casino gaming partner’

Earlier this year, the name, image and likeness collective that supports Iowa received a mid-six-figure commitment from a company that owns and operates gaming and resort destinations.

In January, the regional gaming operator Elite Casino Resorts announced a $500,000 contribution to The Swarm Collective. The news release called Elite Casino Resorts the “exclusive casino gaming partner” of the collective. The release said it was the first corporate partner to pledge at least $500,000 to The Swarm Collective.

The Swarm Collective is a nonprofit organization that helps create NIL opportunities for Iowa football and men’s and women’s basketball players. The Swarm Collective CEO Brad Heinrichs told On3 in March that the collective provides every athlete who signs with the collective the opportunity to earn a minimum amount of revenue. He said that number for the 2022-23 school year is around $10,000.

Iowa’s news release regarding the sports wagering investigation said the 26 current athletes about whom it has received information are members of the university’s baseball, men’s basketball, football, men’s track and field, and men’s wrestling programs.

The news release that announced the partnership between Elite Casino Resorts and The Swarm Collective included a photo of Iowa men’s basketball coach Fran McCaffery, women’s basketball coach Lisa Bluder, Rhythm City Casino Resort Regional Vice President and General Manager Mo Hyder and Riverside Casino & Golf Resort General Manager Damon John on the court at Iowa’s Carver-Hawkeye Arena.

“If you look at it from a social responsibility perspective,” said Dr. Lisa Kihl, an associate professor of sport management at Minnesota and the director of the university’s Global Institute for Responsible Sport Organizations, “think of higher education, or any organization, has an obligation to safeguard the community and if you’re promoting, even if you’re not literally promoting, but being in a partnership with a casino, it raises a host of questions related to the potential negative impacts, I’d say, of gambling sponsorship advertisements within a context where you have the most vulnerable adults or youth that have, what, two or three times higher incidence of gambling problems.

“So it’s an interesting partnership to be involved in knowing that colleges are ripe with individuals that have potentially high levels of gambling on sports and potential for gambling problems.”

At the time of publishing, an Iowa athletic department spokesperson hasn’t provided comment in response to a request from On3.

Swarm Collective said partnership is about ‘work for charity’

Elite Casino Resorts owns five properties, including three in Iowa: Riverside Casino and Golf Resort, Grand Falls Casino & Golf Resort, and Rhythm City Casino Resort. Plus, Elite Casino Resorts’ LinkedIn profile says ELITE Sportsbook is the only locally owned sportsbook in the state of Iowa.

The Swarm Collective’s website lists Elite Casino Resorts atop its list of business partners. Elite Casino Resorts’ website features The Swarm Collective’s logo, which includes a link to the collective’s website.

There isn’t legislation in the state that governs college athletes’ NIL rights.

“Obviously, gambling has become mainstream America to some level, right?” Heinrichs said of the current landscape in a phone interview on Monday, prior to when the university released its statement regarding the ongoing investigation. “Whether we’re talking about fantasy football or casinos or sportsbooks across the country, whatever. More and more states have legalized it so I think it’s definitely a concern and the stuff that you’ve seen in the news recently with sports gambling headlines, I mean it’s clearly a concern.

“But our relationship with Elite Casinos is that they’re not wanting our student-athletes to market for their casinos. They’re wanting our student-athletes to do work for charity. They’re basically paying The Swarm as a donation to try to have the student-athletes do greater good for the Eastern Iowa community. It’s not as if they’re paying the student-athletes to go and try to get people to gamble more.”

At the time of publishing, Elite Casino Resorts hasn’t responded to multiple requests for comment by voicemails left at its properties or submitted online.

“It basically puts us in a position where you’re entering dangerous waters between the integrity of a gaming industry and the integrity of competition on the sports field,” said Dr. Kadence Otto, a professor of sport management at Western Carolina who teaches courses in sport ethics, sport law and risk management, and global sport and culture. “I think the danger is that the integrity of both of those institutions has to be maintained, otherwise both fail.”

More than $170 million in sports wagers placed in April in Iowa

The IRGC’s sports wagering revenue report for April 2023 says 19 casinos in the state reported a total sports wagering handle of more than $172 million. The casinos reported more than $158 million in payouts and more than $14 million in net receipts for the month.

In April, Elite Casino Resorts’ three casinos in the state reported more than $4 million in their combined sports wagering handle and $138,016.59 in their net receipts.

The IRGC’s sports wagering revenue report for the 2022 fiscal year lists nearly $2.5 billion in total sports wagering handle and more than $139 million in net receipts.

Iowa legislators passed a sports betting bill in May 2019 and operators received their first wagers in August 2019.

Kihl said the association of athletes or coaches in connection with casinos or sportsbooks could potentially reduce the potential perceived risks for consumers.

“That would be my first thing. You’ve got to read the research about sports gambling, young college students, male college students and if they started in high school, they probably have a two-thirds (likelihood) that they will continue as adults and then potentially become problem gamblers,” Kihl said. “Much of the advertising right now is really directed at young people.”

‘I don’t feel like they have any nefarious intentions’

The news release that announced Elite Casino Resorts’ contribution to and partnership with The Swarm Collective said its pledge is part of the company’s Giving Back Program, which Elite Casino Resorts says “makes charitable contributions to local nonprofits, fire departments and law enforcement agencies.”

“If you think about it, these casinos are for-profit,” Heinrichs said. “Who are they making profits on? Well, they’re making profits on people in the community generally, right? This is one way for the casinos to give back and infuse some of that capital back into the community to try to build communities up. That’s really I think what they’re trying to do. They’re not trying to use these student-athletes as a marketing tool to generate more revenue for their casino.”

Otto speculated that root of some current problems related to sports gambling or the NIL landscape are tied to the compensation model in major college athletics.

If athletes aren’t paid “their worth” by their school, Otto said, “then they’re going to be tempted, and as anyone would be, to accept monies elsewhere because they know that they deserve those monies and they can command them in an otherwise free market, which the NIL [era] is trying to open up as sort of the semblance of a free market.”

Kihl said the U.S. hasn’t learned from the U.K. or Australia regarding gambling-related problems and the resulting regulations. She used the phrase slippery slope in conversation and she wondered what might come next from a casino operator’s contribution to a collective.

“But where does it go from there?” she asked. “So they have this initial – I’ll call it a partnership – and then so where does it grow? So then they need another $500,000 or a million [dollars]. … It starts a slippery slope of what are the barriers? Like, where is the endpoint here? Is it always [that it] has to give back to the community? Where is that money giving back to the community? Is it for problem gambling? Like, where’s it going?”

“I do know that Elite Casinos is looking at us as a charitable avenue for them to help donate to the community,” Heinrichs said. “They know their money’s going to student-athletes that are going to be helping the community so I think it’s a pretty noble act by them. They’re not trying to use the student-athletes as pawns to promote gambling.”

Is that possible though? What’s the balance required?

“I’m sure that there’s a balance there for sure,” Heinrichs said. “But knowing the people over there and that we’ve dealt with, they’re really good people and I don’t feel like they have any nefarious intentions. I feel like their intentions are pure from what I can tell. If we thought there was something nefarious going on, we wouldn’t have entered into the partnership. We feel very comfortable with who they are and what they’re trying to accomplish.”