Nebraska Lawmakers Debate Future of Digital Sports Betting

Lincoln, NE – Nebraska lawmakers gathered on March 10 for a pivotal hearing before the General Affairs Committee regarding the potential legalization of digital sports betting in the state. Over three hours of testimony featured passionate arguments from both supporters and opponents of the expansion, with the latter group dominating the session. While no vote was taken, the hearing shed light on the deeply divided opinions about Nebraska’s gambling future.

The hearing focused primarily on LR20CA, a proposed constitutional amendment that would put the question of legalizing digital betting on the ballot for voters. This amendment, if passed, would pave the way for subsequent bills that could introduce digital wagering platforms in the state. However, despite the lengthy testimony, the bill’s fate remains uncertain, especially as proponents and opponents alike acknowledge that illegal online betting is already widespread in Nebraska.

The Black Market Argument

A key point of agreement between both sides was the recognition of a robust black market for digital betting already operating in the state. Advocates for legalization argue that regulating digital sports betting would help combat this underground market by providing law enforcement with tools to track and manage it. Proponents also emphasize that a legal framework would generate tax revenue for the state, with estimates ranging from $19 million to $32 million annually.

However, opponents of legalization argue that regulating online sports betting would not curb the black market but rather encourage more people to gamble, exacerbating addiction rates and other social harms. Les Bernal, a prominent anti-gambling advocate from Stop Predatory Gambling, called legalized betting “an epic policy failure,” citing studies that show a rise in addiction rates in states where gambling has been legalized.

“Legalizing sports betting would increase gambling addiction rates, which already harm our communities. The social costs far outweigh the potential benefits,” Bernal testified.

 

The Push for More Competition

While some critics worry about addiction, others, including casino operators and gaming companies, argue that the expansion of digital betting is an economic necessity. The testimony highlighted that Nebraska’s neighboring states, including Iowa, have already legalized online sports betting, creating a competitive market across the region. Iowa, in particular, was frequently referenced, with geolocation service GeoComply providing data showing a dramatic increase in attempts to place illegal bets in Nebraska.

Lindsay Slader, senior vice president at GeoComply, testified that geolocation checks in Nebraska surged by 63% during the 2024 NFL season, illustrating the extent of the state’s illegal sports betting market. Lance Morgan, president and CEO of Ho-Chunk Inc., which operates casinos in Nebraska, also spoke in favor of legalizing digital sports betting, pointing out that Nebraska’s tribal casinos should be able to participate in the booming market. He warned that failing to legalize digital betting would leave Nebraska at a competitive disadvantage to neighboring states.

“I want to make sure we are not victims of this growth. We are local entities, and we deserve to be participants,” Morgan said, adding that the state’s casinos could partner with major betting companies to increase their market share.

The economic argument for legalizing digital sports betting was another central theme. Morgan estimated that Nebraska could see up to $32 million in annual tax revenue from legal online sports betting, while a fiscal note from the LB421 bill projects a more modest $19 million annually starting in FY 2027. These figures are based on a proposed 20% tax rate, which would be among the highest in the nation. However, comparisons to other states raised questions about the reliability of these projections. In West Virginia, a state with a similar population size to Nebraska, total tax revenue from digital betting has been relatively low, despite the state having a 10% tax rate. Similarly, Kansas, with a slightly larger population, has generated $26.5 million in tax revenue since launching digital sports betting in 2023.

Critics argue that Nebraska’s projected tax revenue may be overly optimistic, especially considering that many of the major national operators—who dominate the U.S. sports betting market—are not based in Nebraska and may not significantly contribute to local employment.

 

The Issue of College Sports Betting

An additional bill discussed during the hearing, LB 63, seeks to lift the state’s ban on betting on Nebraska college teams when they play at home. Nebraska is currently the only state with NCAA Power 5 teams to impose such a restriction. Proponents of the bill argue that the rule is outdated, especially now that college athletes can benefit from the Name, Image, and Likeness (NIL) rights, making them less likely to risk their professional futures for gambling purposes.

“Since NIL rights came into play, freshmen are coming into college making millions of dollars. The notion that they would throw a game for gambling money is unrealistic,” said Lynn McNally, CEO of the Nebraska Horsemen and government relations director for WarHorse Casinos.

However, opponents of the bill argue that allowing betting on college games could put student-athletes at risk of exploitation and increased gambling addiction. They also voiced concerns about the integrity of college sports.

 

People are already participating in this… not passing this won’t stop that. We should draw upon the revenue for public purposes.

A Divided Legislature

At the close of the hearing, it was unclear which way the General Affairs Committee would lean, as the testimony showed significant divisions between lawmakers and their constituencies. While supporters of digital sports betting argue that it’s a missed economic opportunity, the overwhelming presence of opponents during the testimony suggests a hesitancy within the legislature to move forward with full-scale legalization.

Senator Eliot Bostar, sponsor of the LR20CA amendment, emphasized the need to act on this issue. “People are already participating in this,” he said, adding that “not passing this won’t stop that. We should draw upon the revenue for public purposes.”

As the committee deliberates on the future of digital sports betting in Nebraska, one thing is certain: The debate is far from over, and the state’s lawmakers face a complex decision with far-reaching consequences. The committee has not yet scheduled a vote, but with growing opposition and significant concerns over social impacts, it’s clear that this issue will continue to dominate the political landscape in Nebraska.