Iowa Sets July 1 Target for Restricting Sweepstakes Casinos

Sweepstakes casinos in Iowa aren’t facing a ban just yet. But after recent legislation, their future in the Hawkeye State is questionable at best.

Iowa governor Kim Reynolds signed Senate File 2289, which grants power to the Iowa Racing and Gaming Commission to take any appropriate action against sweepstakes casinos and other forms of gambling that operate without a state license.

Additionally, it adds penalties for unlawful betting and makes state tax withholdings automatic in the event a bettor in Iowa needs to file a form for their winnings on their federal tax return. Previously, Iowa set a threshold of $1,000 for non-slot machines and $1,200 for slot machine winnings. If a bettor came in under that, no state tax withholding was necessary.

The provision regarding sweepstakes casinos in Iowa will likely have the greater impact. While the language is broad enough that the IRGC could take no action, actions in other states suggest that’s not likely. Multiple states, including nearby Illinois and Indiana, have sent cease-and-desist orders to sweepstakes casinos, with Indiana going as far as to ban them from its borders.

SF 2289 expressly grants cease-and-desist powers to the IRGC, something that probably wouldn’t happen unless Reynolds and the Iowa legislature intended for it to be used.

What Is Iowa’s Approach to Sweepstakes Casinos?

Iowa is opting to leave the decision on restricting sweepstakes casinos to the people who should know them best. The IRGC has always had the power to regulate licensed forms of gambling in the Hawkeye State, which covers a lot of ground.

Iowa has had legal gambling since 1991, when the state’s first riverboat casinos opened. It now has 19 brick-and-mortar casinos located throughout the state, and it added online sports betting in 2019.

But sweepstakes casinos in Iowa have never been regulated, allowing them to circumvent the rules. That’s been the case in other states, which has led to the recent crackdown on sweepstakes casinos across the country.

What Other Penalties Have Been Added To the Law?

SF 2289 gives the state the power to ban violators from placing any legal wagers in the state. Iowa law already allowed the state to ban those who committed unlawful betting from entering any of the state’s casinos. However, the state code had been left untouched regarding sports betting.

This law closes that loophole. If a person is convicted of unlawful betting in Iowa on two occasions, the state can now ban them from sports betting as well as in-person casino gambling.

Do Sweepstakes Casinos in Iowa Have a Future?

It’s possible, because of the path the Iowa legislature chose. Rather than an outright ban, Iowa’s decision opens the door for sweepstakes casinos to either work with the state or exit entirely.

If sweepstakes casinos choose to work with the IRGC, they could legally operate with an Iowa license. That would allow them to continue offering both Gold Coin and Sweepstakes Coin play, as they currently do.

Option No. 2 would be to eliminate Sweepstakes Coin play in Iowa. That would mean players could not win any real prizes and would play only for fun. This option has been used in other states, although these have come after outright bans.

Finally, sweepstakes casino operators could choose to exit Iowa entirely. That’s happened in several states that have enacted bans. Prior to 2025, most sweepstakes casinos operated in 45 states, In most cases, that has fallen to 33 or less.

What’s Next for Sweepstakes Casinos in Iowa?

July 1 is a critical date to watch. If the IRGC chooses to send a deluge of cease-and-desist orders, it likely means the end of Iowa sweepstakes casinos. Anything else probably means that the state will work with sweepstakes casino operators to come to an understanding.

In either case, players have until that date to play without restrictions, unless their sweepstakes casino operator voluntarily pulls out of Iowa before then.