This bill establishes regulations for event-driven contracts traded on dedicated contract markets in Iowa. It defines key terms such as "adjusted revenues," "designated contract market," and "event-driven contract," which refers to financial derivatives that provide fixed payouts based on specific future events, including sporting activities and elections. The bill mandates that individuals or entities must 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 Department 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 event-driven contracts, with all collected 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