Iowa lawmakers are considering legislation that would criminalize proxy betting and sportsbook account sharing, bringing new penalties to individuals who engage in these activities. Companion bills, Senate Study Bill 1097 (SSB 1097) and House Study Bill 21, would formally make these practices illegal under Iowa law, reinforcing existing administrative regulations that already prohibit them.

The Iowa Department of Public Safety, which introduced the bill (pdf), argues that the changes are necessary to modernize Iowa’s sports betting laws and ensure compliance. The bill defines account sharing as an agreement between two or more individuals to share access to a betting account to conceal a person’s identity, either temporarily or permanently. Proxy betting is described as any wagering activity where one person places a bet on behalf of another with the intent to hide the actual bettor’s identity.

While account sharing and proxy betting are already banned under Iowa’s existing administrative code, the proposed legislation would allow law enforcement to prosecute individuals for violating these rules. The bill explicitly adds both terms to the state’s legal definition of illegal gaming, making violations punishable under Iowa Code section 725.7.

Under the proposed changes, individuals found guilty of engaging in illegal gambling through proxy betting or account sharing would face a range of penalties depending on the amount wagered. Smaller offenses could result in serious misdemeanor charges, carrying a minimum fine of $430 and up to one year in confinement. More significant offenses could be classified as a Class D felony, which is punishable by up to five years in prison and a minimum fine of $1,025. In cases where larger sums are involved, violators could be charged with a Class C felony, leading to potential imprisonment for up to 10 years and fines between $1,370 and $13,660.

Legislative Debate and Lawmaker Reactions

The Senate Judiciary Committee has already approved SSB 1097 for further consideration, and the bill is expected to be renumbered as Senate File 395 as it moves forward in the legislative process. However, lawmakers remain divided on the necessity and effectiveness of the bill, according to a report published by Des Moines Register.

Sen. Dan Dawson, R-Council Bluffs, who chaired a subcommittee hearing on the legislation, emphasized that enforcement is critical for maintaining the integrity of Iowa’s sports betting laws. He stated that if sports betting remains legal in the state, authorities must ensure that existing laws are effectively enforced rather than relying solely on operators to prevent unauthorized activity.

Conversely, Sen. Janet Petersen, D-Des Moines, opposed the measure, arguing that it places the burden entirely on individual bettors rather than sportsbook operators, which she believes should be responsible for improving security measures to prevent account sharing and proxy betting. Petersen also raised concerns about how the state’s Division of Criminal Investigation (DCI) would investigate these offenses, questioning whether law enforcement had the necessary resources to enforce the law effectively.

Impact on Iowa’s Sports Betting Market

Iowa legalized sports betting in 2019, allowing residents aged 21 and older to place bets on fantasy sports, professional leagues, and college sports through licensed operators such as FanDuel and DraftKings. Since then, the market has experienced steady growth, with over $2.8 billion wagered in 2024, reflecting a 14% increase compared to the previous year, according to the Iowa Racing and Gaming Commission.

Concerns over proxy betting and account sharing were heightened following the 2023 college sports betting scandal, which led to an investigation into more than two dozen student-athletes at the University of Iowa and Iowa State University. The probe found that 35 athletes from various sports—including football, basketball, baseball, and wrestling—had engaged in illegal betting, including wagering on their own teams. Although charges were dropped due to warrant issues, several athletes lost their NCAA eligibility as a result.

In response to this controversy, members of the Iowa Racing and Gaming Commission previously expressed the need for rule changes to strengthen enforcement against illegal betting practices. The proposed legislation aligns with those concerns by providing law enforcement with clearer authority to charge individuals involved in proxy betting and account sharing.

The bill also criminalizes the transfer of anything of value for placing wagers in a parimutuel pool or any other authorized wagering system if the transaction occurs outside of an official gambling venue. This provision is intended to curb underground betting networks that may attempt to bypass regulated sportsbooks.