By David O. Klein, of Klein Moynihan Turco LLP
In March of 2013, we wrote about Iowa’s attempt to pass legislation that would legalize and regulate fantasy sports gambling within its borders. Despite gaining early traction in the legislative subcommittees to which it was assigned, the proposed Iowa fantasy sports bill died before it could reach the House floor for a vote. However, a new Iowa fantasy sports bill is currently being drafted by Rep. Jake Highfill (R-Johnston) and Sen. Jeff Danielson (D-Cedar Falls) and may stand a better chance of making it through the legislative process.
Iowa Fantasy Sports Law
While winning monetary prizes from fantasy sports betting in Iowa has been considered illegal by the Iowa Attorney General and the fantasy sports industry generally, there is no law that explicitly addresses fantasy sports. Rather, the notion came from a 1931 case (Parker-Gordon Importing Co. v. Benakis), which categorizes all monetary gaming activities based on chance to be illegal. Iowa’s current law based on the court case is drafted so broadly that fantasy sports gambling is widely construed to be included within the meaning of “gaming activity based on chance.” And even though no Iowa citizens have been prosecuted for playing in online fantasy sports leagues, the Iowa Attorney General has made clear that any fantasy sports league that requires an entry fee or offers participants the chance to win a prize is illegal. Therefore, many fantasy sports sites refrain from paying out winnings to Iowa State residents. This could change in upcoming months.
Iowa Fantasy Sports Bill
According to Sen. Danielson, the forthcoming Iowa fantasy sports bill will not attempt to nullify or replace Iowa’s current gambling statute. Instead, the bill will categorize fantasy sports as a game based predominantly on skill, thereby removing it from the scope of Iowa’s gambling law, which only applies to games that are based on chance. Sen. Danielson’s approach appears to mirror New Jersey’s fantasy sports law, which went into effect last year.
The final adjudication of this law should be of interest to all gaming attorneys and those interested in fantasy sports law in general.
