This bill establishes regulations for event-driven contracts traded on dedicated contract markets in Iowa. It requires individuals or entities to obtain a permit from the Department of Revenue to operate as a designated contract market, with an initial permit fee of $10 million and an annual renewal fee of $100,000. The bill defines "event-driven contracts" as financial derivatives that provide fixed binary payouts based on specific future events, such as sporting activities, elections, and economic indicators. The Department of Revenue is tasked with administering the provisions of the bill, including the collection of fees and taxes.

Additionally, the bill imposes a 20% tax on the adjusted revenues generated from these event-driven contracts, with all revenues directed to the state’s general fund. It also modifies the treatment of event-driven contracts for state income tax purposes, specifying that Section 1256 of the Internal Revenue Code does not apply, and requires taxpayers to recompute their net income accordingly. Furthermore, state income tax will be withheld on gains exceeding $600 from these contracts. The bill includes retroactive applicability provisions for certain tax adjustments starting from January 1, 2026.

Statutes affected:
Introduced: 422.16, 422.35