In an effort several years in the making, Iowa recently issued the State’s first fantasy sports license to DraftKings, Inc. (“DraftKings”). DraftKings wasted no time in getting its operations up and running, having launched its Internet-based Iowa fantasy sports service to the public in recent weeks.

What are some notable provisions of Iowa’s fantasy sports law?

Readers will recall our previous chronicling of Iowa’s struggles to enact a fantasy sports law. Despite those prior efforts, legal fantasy sports did not come to be until the United States Supreme Court struck down the national sports gambling prohibition law, the Professional and Amateur Sports Protection Act (“PASPA”). Following that decision, the State of Iowa moved quickly to legalize sports gambling. In conjunction with allowing legal sports wagering, Iowa enacted a law to permit fantasy sports contests to be operated within the State. Key provisions governing Iowa fantasy sports contests are:

  • Licensure requirements, with an initial license fee in the amount of $5,000;
  • Prevention of employees and certain family members from both participating in contests and sharing confidential information with third parties;
  • Age prohibitions on any would-be contest participants under the age of 21;
  • Requirement that operators establish a maximum number of entries that a participant can submit to a single contest;
  • Strict record retention requirements, including records related to marketing expenses;
  • Requirement that operators submit to audits and mandates of segregation of participant funds from operational funds; and
  • Tax rates of 6.75% on fantasy sports contest adjusted revenues.

Iowa’s fantasy sports law delegates considerable discretion to the State Racing and Gaming Commission to supervise, investigate and punish operators who conduct business in violation of the law, including codified mandates to cooperate with the Division of Criminal Investigations.

Evolution of Iowa Fantasy Sports Law

Iowa’s recent enactment of fantasy sports legislation demonstrates that despite the nationwide proliferation of sports gambling laws, states continue to grapple with whether to permit their residents to participate in legal fantasy sports contests. While Iowa has officially joined the group of states that have legalized fantasy sports, its tax rules and licensure requirements, among other things, further reinforce the fact that each state has implemented unique reggulations in one way or another. Accordingly, in order for operators to effectively navigate this uneven regulatory landscape, it is critical to work closely with knowledgeable fantasy sports lawyers to regularly review their respective contest platforms, entry fees, prize structures and marketing campaigns.