Proposed legislation filed ahead of Iowa’s 2026 legislative session would expand the enforcement authority of the Iowa Racing and Gaming Commission, allowing it to act directly against unlicensed gambling operators.
Key Takeaways
- Iowa regulators are seeking expanded authority to issue cease-and-desist orders against unlicensed and offshore gambling operators targeting state residents.
- Illegal gambling activity continues to grow nationally, exposing consumers to fraud while costing states billions in lost tax revenue each year.
- The proposed legislation would close an enforcement gap that currently limits Iowa’s ability to act beyond warning consumers about illegal platforms.
The bill was submitted by the Iowa Department of Inspections, Appeals and Licensing. It would authorize the commission to issue cease-and-desist orders and seek injunctive relief against offshore or otherwise unregulated gambling platforms operating in the state.
Under current law, the commission’s authority is limited to licensed casinos and sportsbooks, leaving regulators with little recourse beyond consumer warnings when illegal operators target Iowans.
Commission Administrator Tina Eick has said this gap exposes residents to financial loss and data theft, particularly as fraudulent sites increasingly mimic legitimate casino brands or promote online casino gambling, which remains illegal in Iowa.
“When Iowans gamble on unlicensed platforms, they’re putting their money and their personal information at serious risk,” she said. “So we’re trying to be proactive here.”
The proposal follows continued growth in unregulated gambling nationwide. According to the American Gaming Association, Americans wager more than $673 billion annually through illegal or unregulated channels, a figure that has increased 22% since 2022.
The association estimates these activities result in $15.3 billion in lost state tax revenue each year. Regulators attribute the expansion to illegal online casinos, offshore sports betting sites, and unregulated skill-game machines that resemble slot machines.
State officials report three common categories of illegal activity in Iowa: impersonation sites designed to steal personal information, sweepstakes-style casinos that advertise cryptocurrency cashouts but never materialize, and offshore sportsbooks offering wagers prohibited under Iowa law.
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Other US states crackdown on illegal gambling
Iowa is not the only state to hone in on the illegal gambling market. Last month, Tennessee Attorney General Jonathan Skrmetti sent up to 40 cease-and-desist letters to online sweepstakes platforms that had been illegally operating in the state.
“The only thing you can be sure about with an online sweepstakes casino is that it’s going to take your money,” Skrmetti said in a statement. “They work hard to make these sweepstakes casinos look legitimate, but at the end of the day they are not. They avoid any oversight that could ensure honesty or fairness. Our office was glad to chase these shady operations out of Tennessee and will keep working to protect Tennesseans from illegal gambling.”
Other states that have targeted illegal sweepstakes gambling include New York, where Governor Kathy Hochul signed the legislation introduced by Senator Joseph P. Addabbo Jr. in December.
Before the ban, New York Attorney General Letitia James had previously argued that sweepstakes casinos violated the state constitution by requiring players to purchase virtual currency in exchange for the chance to win prizes of value.
Collaborating with the New York State Gaming Commission, her office also dispatched cease-and-desist letters to 26 sweepstakes casino operators in June of 2025.
