After years of brainstorming and complex negotiations, the state of Iowa issues its first fantasy sports license to industry giant DraftKings. The company quickly started operations in the state and its first online Iowa fantasy sports service is now up and running.
What does the change entail?
Iowa is one of the few states that faced many hurdles while enacting a fantasy sports law. While efforts to legalize fantasy sports were launched before 2018, the real breakthrough for the state arrived when the US Supreme Court struck down PASPA. The national law prohibiting gambling, also known as the Professional and Amateur Sports Protection Act (PASPA) was removed after the state of New Jersey voraciously fought against it in court.
Iowa lawmakers capitalized on the opportunity to legalize sports gambling in the state. It also enacted a new law that would allow fantasy sports contests to operate in the state alongside legal sports betting. Operators seeking a license will pay a license fee of $5,000. They will maintain adequate records, including their marketing spends. It will prohibit people under the age of 21 from taking part in fantasy sports alongside employees and some family members of people connected with the operators. It also prohibits them from sharing confidential information.
An operator will determine a maximum number of entries that each participant can submit in a contest. Operators have to ensure that participants’ funds do not commingle with company funds. Audits into the business will also be mandatory. Finally, companies will pay a 6.75% tax on adjusted revenues.
Iowa’s entry into fantasy sports
The state has created comprehensive laws to ensure that fantasy sports firms operate fairly and transparently. It has entrusted the State Racing and Gaming Commission with the authority to investigate, monitor and punish firms that violate the laws. It will work with the Division of Criminal Investigations to enquire into companies that engage in unlawful or harmful practices.
Most US states want to tackle gambling and sports betting in a fair and useful way. The industry brings massive revenues and opens up a previously untapped market for operators. However, managing gambling-related harm is another big concern for many state governments. Most states follow their own guidance on preventing gambling harm and reaping revenues, which is clear in a wide variety of tax rates across the nation. The country lacks a singular, federal policy towards sports betting and fantasy sports, which makes it difficult for operators to run their business.