The Iowa Senate has approved Senate File 2470, establishing regulations for prediction markets. Companies must obtain a state permit costing $20 million initially and $100,000 annually. A 20% tax on adjusted yearly revenue from event-driven contracts will be imposed, with tax revenues directed to the state's general fund. Companies are responsible for tax withholding on payouts, treated as Iowa-earned income. A fallback tax plan is included in case of legal challenges to the primary tax structure, imposing a 20% tax on contract purchases if necessary.
"The proposal lays out a structure for companies offering what it calls event-driven contracts. These are financial products that pay out based on whether a specific future event happens or not."
"Under the measure, companies would need a state-issued permit before operating in Iowa. That entry comes at a steep cost, with an initial fee set at $20 million and annual renewals priced at $100,000."
"A central piece of the legislation is a new tax aimed at platform operators. The bill sets a 20% tax on adjusted yearly revenue generated from these contracts."
"Lawmakers added a fallback plan in case the primary tax structure runs into legal trouble. If courts strike it down or block enforcement, the state would instead impose a 20% tax on each contract purchase."
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