Iowa’s 2025 Sports Betting Tax and Account Crackdown

• Iowa legislators are taking a closer look at sports betting regulations, with one bill introduced that could impact how winnings are taxed.
• Another measure puts unwritten rules into effect but still could affect bettors in a negative by accident.

DES MOINES, Iowa – On Wednesday morning, Iowa lawmakers will meet in a subcommittee hearing to discuss HSB91, an Iowa sports betting bill that would require automatic state tax withholding on sports betting winnings whenever federal taxes apply.

In short, all legal sports betting winnings are considered Iowa-earned income and are subject to both state and federal taxes. With this, sportsbooks would be required to withhold and remit Iowa state taxes before paying out winnings.

While this may seem drastic, the tax withholding rule would only apply to winnings already subject to federal tax withholding, aligning Iowa with IRS guidelines. Since this proposal is a standard measure for sports betting and taxes it is expected to face little resistance in the subcommittee.

If approved, the law would take effect on January 1, 2026.

HSB21: Criminalizing Proxy Betting and Account Sharing

While HSB91 focuses on taxation, HSB21 aims to crack down on proxy betting and account sharing.

Now this measure could affect bettors a little more than anticipated. Attempting to tighten security and fairness in Iowa sports betting, it would categorize violations as illegal gaming. With penalties ranging from a misdemeanor to a Class C felony, the bill has already been recommended for passage by a Judiciary subcommittee.

Now making account sharing illegal and banning proxy betting – placing bets on someone else’s behalf – may not be an issue most think they align with. Though sportsbooks are rare to call this term into question, they all generally have a subsection about account sharing.

• The Management Rules for BetMGM Sportsbook in Iowa are clear about proxy betting.

• The General Betting Rules at Caesars Sportsbook state the same.

However, if this measure is signed into law, breaking certain sportsbook rules could put you in line with criminal charges as well. No more “throw $20 on the Hawkeyes for me when you’re in Council Bluffs this weekend”.

Nothing has changed yet. But, Wednesday’s subcommittee hearing is a likely next step for shaping this path in Iowa’s sports betting future.

News tags: BetMGM | Caesars | IA HSB 21 | IA HSB 91 | Iowa