Iowa Hands Gaming Regulators New Powers Over Sweepstakes Casinos

Iowa’s governor has signed a measure that would grant state regulators more power against unregulated types of gambling, including sweepstakes casinos.

Ziv Chen

Last Updated: May 19, 2026 3:03 PM EDT • 2 minute read

Enjoying SBR content? Add us as a preferred source on your Google account

Iowa Governor Kim Reynolds signed Senate File 2289 into law on May 15, with the measure set to take effect July 1, 2026. The legislation amends multiple sections of Iowa Code Chapter 99, the state's governing framework for gambling regulation, and grants the Iowa Racing and Gaming Commission (IRGC) a tool it previously lacked: the legal authority to issue cease-and-desist orders against unlicensed operators.

The bill is structured as an omnibus measure, with gambling-specific provisions contained in a single division. Beyond sweepstakes casinos, the IRGC's new enforcement reach extends to pari-mutuel wagering, advance deposit wagering, fantasy sports, general games of chance, and sports wagering. The commission can now also pursue injunctive relief through the courts if it chooses to go beyond a cease-and-desist order.

Sweepstakes casinos currently occupy a legal gray area in Iowa, relying on dual-currency systems and virtual credits to sidestep traditional gambling classifications.

Platforms like McLuck, WOW Vegas, and Chumba remain accessible to Iowa residents for now, but the IRGC's new enforcement capabilities create a clearer path to action should the commission determine any operator is running an illegal gambling business.

Iowa joins a growing list of states that have moved to tighten the regulatory screws on the sweepstakes sector. Indiana, Maine, and Oklahoma have each passed outright bans this year. The IRGC has not yet indicated which operators it intends to pursue or when enforcement actions might begin.

Tennessee legislature sends similar restrictions to the Governor's desk

Iowa's move arrives as other states push parallel legislation through their own chambers. Tennessee lawmakers sent Senate Bill 2136 to the governor on May 11, marking another significant step in the national effort to rein in sweepstakes casino operators.

SB 2136 zeroes in on the dual-currency model that has allowed sweepstakes platforms to function like real-money casinos without traditional regulatory oversight. Under the bill, platforms are barred from offering virtual currency that can be redeemed for cash prizes, regardless of whether that currency was purchased outright, received as a bonus, or bundled with another currency type.

The legislation was developed at the request of the Tennessee Attorney General's Office and the Tennessee Sports Wagering Council, both of which had flagged gaps in existing enforcement authority. Beyond the currency prohibition, the bill gives the Attorney General broader investigative tools and the ability to pursue action against operators that lack proper age verification or licensing.

Sports betting, fantasy sports, the Tennessee Education Lottery, nonprofit gaming, and free-to-play platforms are all carved out from the restrictions.

Tennessee regulators had already issued cease-and-desist orders to several sweepstakes platforms earlier in 2025, making SB 2136 a formal follow-up to the existing enforcement posture. Once signed and in effect, the Attorney General's Office and the Sports Wagering Council are expected to begin issuing information requests and pursuing civil injunctions against non-compliant operators.

Written by:
Ziv Chen

Ziv has over two decades of experience in the igaming and sports betting industry, having served in senior marketing and business development positions with both B2C and B2B companies, including Playtech and Microgaming. In 2019, Ziv decided to pursue his passion for writing and became a fulltime industry journalist, covering casino, sports, and gambling business news. He’s specialties include casino games and technology, US state gambling regulation, company performance, as well as gambling affiliates and marketing. As a Pitt graduate, Ziv is a diehard fan of all Pittsburgh sports teams, with the Steelers at the top of the list. In his free time, he enjoys reading crime fiction, biographies (mainly of sports personalities, but not only) and American history. Ziv’s Favorite quote: “We're going to pursue perfection, knowing full well we won't catch it, but we're going to relentlessly chase it," Mike Tomlin, Pittsburgh Steelers Head Coach.