Iowa Passes Bill That Could Target Sweeps Casinos; Advances Prediction Market Regulation Bill

The Iowa legislature has passed an enforcement bill that could expand regulators’ ability to target unlicensed operators, such as sweepstakes casinos and unlicensed daily fantasy sports (DFS) platforms. Separately, lawmakers have advanced legislation that would tax and regulate prediction market event contracts.

SF 2289 Expands Enforcement Tools, Adds “Illegal Sweepstakes” Language

Senate File 2289 has now passed both chambers unanimously and awaits final enactment, following Senate concurrence with House amendments on April 28.

The state Department of Inspections, Appeals, and Licensing put forth the bill, which was sponsored in the Senate by the State Government Committee. It covers multiple regulatory areas and could expand the Iowa Racing and Gaming Commission’s (IRGC) enforcement authority.

Previously, the regulator had said that while it can hold licensees accountable, its powers against unlicensed operators are limited to issuing public warnings rather than direct enforcement action.

If it becomes law, SF 2289 would explicitly empower the IRGC to act against unlicensed gambling operators, including those offering sweepstakes, by enabling cease-and-desist orders and injunctive relief.

The bill allows the regulator:

To take any other action as may be reasonable or appropriate… including… issuing cease and desist orders and obtaining injunctive relief against a person offering games of chance, gambling, sports wagering, or illegal sweepstakes… without holding an appropriate license.”

In a nearly identical language, the bill also allows regulators to pursue unlicensed “internet fantasy sports contests.”

It’s important to note that the bill would not explicitly ban sweepstakes casinos or DFS operators, unlike in states like Indiana and Maine. Instead, it allows the IRGC to formally seek enforcement actions against unlicensed operators if it determines those platforms illegal under Iowa law.

The bill relies on existing statutes for penalties. Violators could face Class D felony charges, and individuals could be subject to a ban on participating in regulated gaming in the state.

SF 2289 now awaits final enrollment and transmission to the governor.

SF 2470 Sets Tax and Licensing Framework for Prediction Markets

At the same time, Senate File 2470, a bill targeting prediction markets, has advanced from a House subcommittee after previously passing in the Senate.

The bill targets popular prediction market contracts, including those for sports and politics. It defines “event-driven contracts” as:

Financial derivatives with “a fixed binary payout based upon the occurrence or nonoccurrence of a specific future event,” including outcomes tied to “sporting activities, lotteries, elections, legislative actions, and economic indicators.”

SF 2470 creates a licensing and regulatory framework for prediction market operators seeking to offer event-driven contracts in the state.

Key provisions include:

• Licensing requirement of a $20 million initial permit fee and a $100,000 annual renewal fee.
• A 20% tax on adjusted net revenue
• A separate excise tax of 20% on the cost of entering into contracts could apply if the primary tax structure is ruled unenforceable.
• Explicit exclusion of sports betting, fantasy sports, and pari-mutuel wagering.

Notably, the legislation sets a temporary regulatory framework. If it becomes law, it applies “until such time” that courts determine whether event contracts fall under Iowa’s existing gambling laws. The bill highlights the uncertainty over federal vs. state jurisdiction and the growing legal battles over the matter.

SF 2470 now awaits a full committee hearing before potentially moving to the House floor for a vote. However, the timing of further movement remains uncertain.

The Iowa Legislature has now passed its traditional 100-day session target. It has now entered an “overtime” period, during which attention typically shifts to budget negotiations and priority legislation. That potentially limits the opportunities for bills like SF 2470.

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