Iowa Bill Seeks To Regulate ‘Prediction Markets’

A new proposal in Iowa would establish state-level regulation of federally certified “prediction markets,” which facilitate stock-market-style gambling on countless real-world events, including sports.

Senate File 2085, introduced Wednesday, would prohibit prediction markets within Iowa’s borders unless the company obtains a permit from the Iowa Department of Revenue.

The bill would establish an initial prediction market permit fee of $10 million, with an annual renewal fee of $100,000.

Prediction markets would pay 20% of adjusted revenues to the state as tax.

Prediction markets include Kalshi, Polymarket, DraftKings Predictions, FanDuel Predicts, PrizePicks, Fanatics Markets, and many more. The gambling sites are controversial, as numerous states have said these types of platforms are an illegal and dangerous form of online sports gambling.

Addiction and Consumer Safeguards?

The legislation, filed by Iowa Republican Sen. Mike Klimesh, would not establish consumer protection measures for prediction markets such as self-exclusion or a requirement to display a gambling helpline number.

Like all forms of online gambling, prediction markets can be highly addictive and harmful.​ Critics argue that some prediction markets have weak age verification.

Prediction markets advertise the product as “trading” rather than betting or gambling.

Iowa regulates conventional sports betting apps and requires some consumer protection around those platforms. DraftKings and FanDuel don’t offer their prediction-style sports gambling in Iowa.

Other States With Prediction Market Bills

Iowa joins New York in an effort to regulate and tax prediction markets, though New York’s proposal is more robust.​

In Tennessee, legislation was recently filed to establish a felony offense for using a prediction market to corrupt an “event.” The NFL and the NCAA have expressed concern about sports betting on prediction markets.

There is potential for legislation on prediction markets in California and Minnesota.

Massachusetts doesn’t have legislation, but it recently scored a major legal win in its efforts to block Kalshi.

This year will feature significant activity around these nascent platforms in the U.S.