I've heard enough about geofencing from sources I trust to believe that it (or some other tracking system) was used to identify individuals betting from certain areas on campus.
I'm far from confident that the geofencing was "set up" by the sportsbooks for the purpose of trying to monitor betting by athletic department employees. From what I understand, the state of Iowa's border is "geofenced." Once an Iowa resident with a on-line betting account crosses into Moline, Omaha, East Dubuque, etc., they lose the ability to place bets on the account until they are physically inside the state border.
With the caveat that I'm not an IT specialist and have zero idea how geofencing works, if they can "block" betting from someone who left the state, why wouldn't they simply block betting anywhere within the athletic buildings?
I think that it is far more likely that the Iowa and ISU buildings were "geofenced" after there was suspicion of improper gambling activities.