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Iowa has decided that if you want to bet on the future, you’ll have to pay for the privilege upfront.
Senate File 2085, introduced by Sen. Mike Kilmesh, would treat prediction market operators as if they were opening a high-end casino.
A $10M cover charge for betting on the future
The bill would require these platforms to pay $10 million just to get a permit allowing Iowans to trade on events such as elections or the economy.
On top of that steep entry fee, operators would owe a 20% tax on their earnings and an additional $100,000 every year to maintain their license.
The message is clear: The state is tired of leaving all the fun to federal regulators and wants its share of the revenue.
Why Iowa is challenging federal oversight
You might wonder why Iowa is building its own wall when these markets are already overseen by federal authorities. Prediction markets are regulated by the Commodity Futures Trading Commission, which classifies the trades as “event contracts” — a type of financial derivative rather than a bet.
State regulators disagree. Their argument is simple: If it looks like a bet and acts like a bet, it’s gambling — and gambling falls under state authority.
Major operators such as Kalshi have been caught in a legal game of whack-a-mole across the country. In Massachusetts, a judge recently blocked Kalshi from offering sports-related contracts, agreeing with state officials that the products closely resembled unlicensed sports betting. Kalshi has responded with similar lawsuits in Nevada and New Jersey, arguing that federal law should preempt state rules.
By creating a formal state permitting system, Iowa is effectively saying, “We don’t care if the CFTC gave you a hall pass. If you want to do business with Iowans, you’ll play by our rules — and pay our taxes.”
Everyone wants a piece of prediction market money
Iowa is not alone in trying to wall off prediction markets. States across the country are finding their own ways to play gatekeeper.
New York lawmakers are pushing the ORACLE Act, which would establish a separate rulebook. The proposal would ban certain “sensitive” trades — particularly those involving sports or politics — to prevent prediction markets from skirting existing gambling laws.
On the federal level, US Rep. Ritchie Torres has introduced the Public Integrity in Financial Prediction Markets Act of 2026. The measure would bar federal officials and executive branch employees from trading on political prediction markets if they possess nonpublic information, aiming to prevent insiders from profiting off government secrets.
