Iowa lawmakers consider legalizing fantasy sports games

DES MOINES - State legislators want to avoid a potential situation where a successful fantasy sports gamer could confront the hard reality of Iowa law in trying to collect big money or prizes while participating in the popular and growing activity.

Iowa is one of only a handful of states where fantasy sports games are considered illegal.

According to the Iowa Attorney General's Office, Iowa law allows participants to gamble against each other when it's incidental to a 'bona fide social relationship” between the participants and no one wins or loses more than $50 over a 24-hour period. Also, it's illegal to engage in bookmaking, which means the wagers/bets must be made physically within the presence of each other.

However, sports enthusiasts in Iowa are now awash with online opportunities to engage in contests offering prizes and money where the participants act as owners or managers in building a simulated team to compete against other fantasy owners based on the statistics generated by real professional athletes or teams.

Peter Schoenke, a Roto Sports Inc. official from Madison, Wis., who represents the 120-member of the Fantasy Sports Trade Association, estimates that at least 350,000 Iowans currently play fantasy sports, but many may not know they are not eligible to legally collect prizes, money or other winnings based on current Iowa law.

'You could win the contest, but then you don't get to win the prize,” he said. 'There have been cases in Iowa and the other five states where someone has won a free contest and thought they were going to win a T-shirt and ESPN said they couldn't mail it to them, so stuff like that happens.”

Sen. Jeff Danielson, D-Waterloo, chairman of the Senate State Government Committee, said he wants to change Iowa law that prohibits fantasy sports games before someone lands a major prize and finds out they can't collect the winnings. For instance, the National Football League offers a $1 million prize for its 'Perfect Challenge” fantasy game, but lawmakers are concerned Iowans may not follow the link to the rules page for such fantasy sports to find out that Iowa is among the states where residents are not allowed to enter.

'We haven't had an ‘a-ha' moment yet where large dollar sums have been in question given our prohibition,” said Danielson, who noted he would like to provide a 'light regulatory touch” in giving fantasy sports legal status in Iowa.

'I want to be proactive. We just haven't had a legal dispute, an ‘a-ha' moment, that's given the issue the opportunity to be salient,” he added. 'It's time for us to clarify it and I personally believe that fantasy sports have economic value. There are a lot of workplaces that come closer together participating in fantasy leagues. It is something we need to have an answer. We can't have this question whether they're legal or not.”

Two separate bills have been offered this session, Senate Study Bill 1068 and House Study Bill 47, that would make it legal for Iowans to win cash and other prizes while playing fantasy sports by defining that the activity as a game of skill that is not gambling.

Stephanie Fawkes-Lee, a lobbyist for the Iowa Annual Conference of the United Methodist Church, said the church views the change as expansion of gambling and is opposed to the House and Senate bills, while representatives of the state's gambling treatment program said they share concerns but are monitoring the legislation at this point.

Rep. Dan Kelly, D-Newton, said he enjoys playing fantasy sports contests with his friends, but believes it becomes gambling when money is involved, and he is concerned it might 'crack open the door” to sports betting and online gambling.

Representatives of Iowa's casino industry say they also are closely monitoring developments but are listed as undecided at this point.

Wes Ehrecke of the Iowa Gaming Association expressed concern that the bills do not speak to age restrictions similar to those imposed on state-regulated commercial casinos and the Iowa Lottery. Casinos hope to be part of the activity but seek more regulation than Danielson envisions and a recognition that there are differences between long-term league play versus daily fantasy sports plays that have exploded among predominantly male players who see the activity as a way to make money rather than as a source of excitement, competition and strategy as association representatives contend.

Schoenke said fantasy sports are an $800 million a year industry with $3.64 billion spent by consumers in direct revenue. Estimating the Iowa has nearly 1 percent of the nation's population, he said about $340 million is spent in the Iowa economy related to fantasy sports.

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