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New sports betting rules would make it tougher for athletes, minors to wager in Iowa
Iowa DCI has special team to catch sports betting violators
Erin Jordan
Jan. 8, 2024 6:00 am, Updated: Jan. 8, 2024 11:50 am
Iowa plans to tighten up rules for sports betting to reduce the risk of violations like those committed by some University of Iowa and Iowa State University current and former student-athletes.
Sportsbooks would be required to maintain a list of prohibited bettors — including players, coaches, trainers and referees — to make sure those people are not placing bets on sports. New rules also would require bettors to use multifactor authentication on electronic devices and for sportsbooks to submit annual reports on geolocation tests to bar out-of-state sports online gambling in Iowa, which state law prohibits.
“I applaud them for understanding there could have been some gaps in their current rules,” said Matt Holt, founder and chief executive officer of U.S. Integrity, a Nevada company that partners with sports teams, leagues and sports-betting operators to ensure integrity of sports betting. “Obviously issues in the state itself, at Iowa and Iowa State, sort of highlighted the need for a real prohibited bettor mandate that is sort of in line with what we see across the country.”
Criminal charges filed last year against Iowa and Iowa State student-athletes — as well as against former student-athletes and others associated with the schools’ athletic programs — for alleged sports betting violations made national news as the first large-scale bust since states started legalizing sports betting in 2018.
As of Thursday, the Iowa Division of Criminal Investigations has charged 25 people in Story and Johnson counties as part of the ongoing investigation, the agency said. Of those, 16 have pleaded guilty to underage gambling, a simple misdemeanor. The original charges for some included using mobile sports betting apps under a different name to conceal their identities.
Another seven cases are pending, one was dismissed and one was moved to juvenile court.
The Governor’s Office in August gave the Iowa Racing and Gaming Commission permission to pursue new rules for sport betting “to ensure compliance with state law and maintain public confidence in sports wagering.”
The commission last week released a draft of the proposed rules to be considered for adoption at a Jan. 25 meeting. The Administrative Rules Committee could also weigh in on the proposed changes, which would require vendors to:
- Maintain a list of prohibited people (or participate in a group that maintains a list)
- Require the last four digits of Social Security numbers, in addition to other information, to verify users' identities
- Perform geolocation tests and submit annual results to the commission
- Require multifactor authentication on devices every two weeks
- Post warnings against underage use and account sharing
Bank account verification removed
Several student-athletes and former student-athletes were charged with tampering with records based on allegations they attempted to disguise their identities by placing bets through other people’s accounts. For example, Iowa State’s then-quarterback Hunter Dekkers was accused of placing bets under his mom’s name.
“One of the things that has triggered a lot of these investigations to catch some of these individuals playing under false pretenses has been the account sign-up isn't matching banking info,” Holt said. “Mom, Dad, your brother, your girlfriend, your boyfriend, your cousin sign up for the account for you, but then you're funding with your Venmo, your PayPal, your bank account.”
An early draft of Iowa’s proposed rules required sportsbooks to confirm bettors are authorized users of bank accounts funding their wagering. The revision the Racing and Gaming Commission provided The Gazette last week did not include that section.
7070C Final Adopt With Preamble by The Gazette on Scribd
Brian Ohorilko, who stepped down as executive director of the commission Jan. 1 after 20 years with the agency, told The Gazette last month he anticipated the rules proposal might be tweaked, especially the provision requiring sportsbooks to verify bank account and sports wagering accounts be controlled by the same people.
“We anticipate some changes to Item 12, 13.5(4) as stakeholders have indicated that this type of requirement may infringe on some federal banking regulations,” he said. The Iowa Bankers Association and other unidentified stakeholders weighed in on the earlier version before the changes were made, the new proposal says.
Checking bank account information isn’t mandated in every state with sports betting, Holt said, but he predicted it will be industry standard in the next 18 months.
Companies to check for prohibited bettors
Most states with sports betting programs say if you’re a player, coach, referee or other person with inside knowledge of a game or team you can’t bet on those competitions, Holt said. But it wasn’t until recently there were ways to verify that information, he said.
Now companies, like U.S. Integrity, have developed systems that allow teams and leagues to share sensitive information — including prohibited bettor lists with identifying information, including Social Security numbers — in secure platforms with encryption. Sportsbooks can check these lists to make sure prohibited bettors aren’t wagering.
“There is a little bit of ambiguity that goes into those lists,” Holt said. “What if this guy is an equipment manager to the women’s volleyball team? Should he be able to bet the men's baseball team? I think most of the leagues and conferences have taken the approach if you have locker room access or travel with the team, that falls within the ‘person of influence’ category.”
If Iowa’s proposed rule changes had been in place a year ago, the violations at Iowa and Iowa State might not have happened.
“If we think about what happened there, if those individuals were on a prohibited bettor list prior to April of 2023, then when they attempted to place those wagers, in some cases, they would have gotten a message that says 'You are prohibited from placing this wager. You are a prohibited bettor’,” Holt said.
Expert: DCI probe unmatched in other states
The behavior that resulted in criminal charges at Iowa and Iowa State is happening all over the country — or at least it was last year, Holt said. The Iowa probe put student-athletes and vendors on guard.
“We have not seen any other organization make the attempts they (DCI) did to uncover this type of activity,” Holt said. “All the educational efforts by many conferences and the schools since then have helped deter and bolster efforts to make those numbers lesser than we saw at Iowa and Iowa State.”
The DCI in October 2021 created a Sports Wagering Team of five special agents and one special agent in charge to address the rapid growth in sports betting in Iowa after it was legalized in 2019. In fiscal 2022, the team received and investigated suspicious activity reports from 11 of the 18 licensed casinos that had associated sportsbooks at the time. Those reports led to 34 incidents that year. Iowa’s 19 licensed casinos now all have sportsbooks.
By fiscal 2023 — when the Iowa and Iowa State investigation happened — the DCI’s Sports Wagering Team had 204 cases related to sports wagering or other forms of internet gambling, such as those involving online casinos or other websites that originate outside the United States.
“The significant increase in investigations from FY2022 is primarily due to increased reporting by the sports wagering operators,” the DCI said in its fiscal 2023 report, filed last week with the Iowa Legislature.
DCI Assistant Director Dave Jobes said Thursday his agency has been in close contact with the Racing and Gaming Commission as the group revised sports betting rules and “supports the efforts.”
Comments: (319) 339-3157; erin.jordan@thegazette.com