Iowa is one of a handful of states in which fantasy sports games played for real money are deemed illegal – due, in large part, to an overly broad anti-gambling law, and cautionary guidance from the Iowa Attorney General.  Against this legal backdrop, Iowa State residents have been prohibited from participating in paid contests, for prizes, on almost all major fantasy sports websites.

Lawmakers in Iowa have been seeking to overturn this prohibition with a series of bills, beginning in March 2013, and then again in January 2013.  These bills faced initial resistance due to criticism about the scope of the changes that were contemplated.  As such, earlier bills either died in committee, or failed to come before a vote of both Iowa legislative bodies.

Notwithstanding earlier headwinds, new bills have been introduced in both Iowa houses this session, Senate Study Bill 1068 and House Study Bill 47, which seek to address some of the prior shortcomings.  Instead of amending Iowa’s anti-gambling statute wholesale, these bills would, instead, designate fantasy sports contests (that comply with certain requirements) as games of skill; thus taking them outside of the reach of Iowa’s wide-ranging anti-gambling law.

Iowa Fantasy Sports Carve-Outs Follow a Pattern

The matching Iowa bills, sponsored by Rep. Jake Highfill (R-Johnston) and Sen. Jeff Danielson (D-Cedar Falls), respectively, track a succession of recently proposed/adopted state legislation in that they adhere to provisions of the federal law exemption established by the 2006 Unlawful Internet Gambling Enforcement Act (“UIGEA”).  Joining the Iowa bill in its embrace of the UIGEA carve-out is a law that was passed in Maryland in May 2012, as well as recent bills introduced in WashingtonIndiana and Montana.

Consistent with UIGEA, the Iowa bills state, in matching language, respectively, that a fantasy game would be considered an exempt game of skill:

[I]f all prizes and awards offered to winning participants are established and made known in advance of the contest, all winning outcomes reflect the relative knowledge and skill of the participants and are determined predominantly by accumulated statistical results of the performance of individuals in multiple actual sporting events, and no winning outcome is based on the score, or performance, of any single actual team or combination of such teams or solely on any single performance of an individual athlete in any single actual sporting or other event.

Io-wave?

State religious leaders and others within the legislature have voiced concerns about potential gambling-related social ills that could result from legalizing fantasy sports offerings.  However, the Iowa bills have support among both parties, in both State legislative bodies, and have been endorsed by the Fantasy Sports Trade Association and other trade groups.  Further, the Iowa bills are part of a clear legalization trend picking up steam in state legislatures across the country, as well as gaining support from professional sports leagues, media companies and Wall St. investors.  Against this backdrop, the prospects for legalization of fantasy sports in Iowa appear greater than ever before.

The evolution of state law applicable to fantasy sports remains a significant topic for all gaming attorneys, fantasy sports lawyers and those interested in fantasy sports law in general.  If you plan on engaging in, or operating, a fantasy sports or other gaming venture, it is important to retain competent legal counsel to help you design your contests so that they comport with applicable law.