Iowa Senate approves legislation to expand regulators' ability to curtail illegal gaming

The Iowa Racing and Gaming Commission has claimed that it has little recourse to limit the operation of unlicensed online gaming entities taking action from people in the state, but a bill to address that deficiency now has been given the green light by the Iowa Senate. Enactment could prompt regulators to send cease-and-desist orders to offshore websites and sweepstakes casinos, among others.

The Iowa Senate voted 44-0 to approve Senate File 2289 on Feb. 23, responding to communication from the Iowa Racing and Gaming Commission (IRGC) that the agency is unable to do much to curb unlicensed gaming in the state beyond advising residents to only play with licensed operators under current statutes. Senate File 2289 would add to that list of powers of the IRGC.

The bill mentions "illegal sweepstakes" specifically but otherwise gives a more general description of unlicensed gaming as the activity that the IRGC could target with its new powers. Those abilities would include sending cease-and-desist orders to entities believed to be offering gaming without a license as well as seeking injunctive relief from the state's courts toward that end.

Senate File 2289 also toughens penalties for violations of Iowa gaming laws, elevating convictions to a Class D felony. Sentences can consist of up to five years in a state penitentiary.

While Iowa is home to several licensed online sportsbooks, it does not have a regulated system for Iowans to play the best online craps games or other types of casino games online. Previous legislation suggested that expansion has been short-lived.

Should the Iowa House of Representatives consent to Senate File 2289's language and Gov. Kim Reynolds sign the bill, the IRGC's first targets could be offshore gaming websites and online sites offering casino-style, sweepstakes-based games. 

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Numerous US states have already seen gaming regulators or law enforcement demand that the operators of sweepstakes casinos cease selling digital currency packages to people within their borders. Some states, like California, have enacted new laws making such websites explicitly illegal.

In Iowa, neither has happened yet, but Senate File 2289's enactment could change that. The intentional inclusion of "illegal sweepstakes" suggests that being among the foremost priorities for the IRGC.

However, the bill does not define the term illegal sweepstakes, and makes no mention of dual-currency systems like legislation in other states has. That could leave room for sweepstakes casinos to challenge the law and whether the state can regulate online casino payment methods in that way.

At the same time, sweepstakes operators have been very proactive in complying with cease-and-desist orders from state agencies to date, so a court challenge may be unlikely. The exit of sweepstakes casinos from Iowa could clear the way for Iowans to receive offers like the Golden Nugget Casino promo code for new users in Michigan, New Jersey, Pennsylvania, and West Virginia should Iowa adapt its laws in the future.

Senate File 2289 would give IRGC staff more tasks to complete and make it a more robust gaming regulatory body, on par with similar agencies in other states. That could also be a negative development for sweepstakes casino operators.

Derek Helling