Iowa Poised to Make Sharing a Sports Betting Account a Class D Felony

Gaming attorney Daniel Wallach alerted the public on Thursday that Iowa is looking to make proxy betting and wagering account sharing illegal in the state.

It gets worse. 

Those engaging in the activity could face prison time.

The bill title is listed only as "A bill for an act relating to illegal gaming, and making penalties applicable".

It is a Committee Bill with a subcommittee meeting slated for 01/23/2025 at 12:00PM.

What is a Class D Felony?

The exact definition of a Class D felony varies by state and jurisdiction.

In Iowa, a Class D felony is punishable by up to five years in prison and a fine of up to $7,500. However, the sentence may vary depending on the specific crime and the offender's history.

Some of the more common cases considered to be a Class D felony include such crimes as forgery, stalking, domestic abuse and some DWI cases.

In regard to the proxy betting, the monetary amount would need to be over $500.

NEW: A bill to ban proxy betting has been filed in the Iowa Legislature. HB 21 would treat proxy betting and sports betting account sharing as "illegal gambling" punishable as a Class D felony (for amounts over $500) with up to 5 years "confinement." https://t.co/IM6zH60szY pic.twitter.com/Mf3db0T3kl

— Daniel Wallach (@WALLACHLEGAL) January 16, 2025

What is Proxy Betting?

Proxy betting is the act of one individual betting on behalf of another person.

This type of activity has long been considered legal in Las Vegas.  It's frowned upon elsewhere in the U.S.

And even in Nevada, that state's Gaming Control Board investigated allegations that Las Vegas Sands Corporation allowed high-stakes Chinese players to bet millions of dollars using other people's names back in 2016. 

Interestingly enough, proxy betting has exploded in popularity as a result of social media platforms like TikTok.

From FindLaw:

While Minnesota investigators say their investigation is the first of its kind, it also appears that the Minnesota TikTok proxy gambling operation is not unique. It's happening elsewhere – and they are almost certainly illegal.

As of Feb. 1, no charges had been filed against the Minnesota men, but the investigation is continuing. Nicole Roddy, a spokesperson for the gambling enforcement agency, said that when it comes to illegal gambling, "It's not just about making sure people follow the law; it's about consumer protection." Without legal assurance, she said, "If you place a wager, there's no guarantee that you'll get paid if you win. There's no way to know if the betting will be run fairly."

One of the reasons why proxy gambling is illegal is that it provides an avenue for money launderers. A spokesman for the American Gaming Association responded to news of the Minnesota investigation by saying that "actions like this" violate casinos' protocols against money laundering "and are a threat to our financial system."

It's not a foregone conclusion that Iowa will adapt a law that makes proxy gambling and account sharing illegal.

Watch this space.