House Study Bill 122 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON KAUFMANN) A BILL FOR An Act relating to certain tax receipts on internet fantasy 1 sports contests and sports wagering, providing for tax 2 credits, making appropriations, and including applicability 3 and effective date provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1521YC (3) 90 ec/rn

H.F. _____ DIVISION I 1 SPORTS WAGERING RECEIPTS 2 Section 1. Section 8.57, subsection 6, Code 2023, is amended 3 by adding the following new paragraphs: 4 NEW PARAGRAPH . f. For the fiscal year beginning July 1, 5 2023, any unobligated and unencumbered moneys in the sports 6 wagering receipts fund from the previous fiscal year are 7 appropriated to the county endowment fund created in section 8 15E.311. 9 NEW PARAGRAPH . g. This subsection is repealed June 30, 10 2024. 11 Sec. 2. Section 15E.311, subsection 3, paragraph a, Code 12 2023, is amended to read as follows: 13 a. At the end of each fiscal year, moneys in the fund 14 shall be transferred into separate accounts within the fund 15 and designated for use by each county in which no licensee 16 authorized to conduct gambling games under chapter 99F was 17 located during that fiscal year. Moneys transferred to 18 county accounts shall be divided equally among the counties. 19 Moneys transferred into an account for a county shall be 20 transferred by the department to an eligible county recipient 21 for that county. Of the moneys transferred, an eligible county 22 recipient shall distribute seventy-five percent of the moneys 23 as grants to charitable organizations for charitable purposes 24 in that county and shall retain twenty-five percent of the 25 moneys for use in establishing a permanent endowment fund 26 for the benefit of charitable organizations for charitable 27 purposes. In addition, of the moneys transferred from moneys 28 appropriated to the fund from the sports wagering receipts 29 fund created in section 8.57, subsection 6 , and distributed, 30 eligible county recipients shall give consideration for grants, 31 upon application, to a charitable organization that operates 32 a racetrack facility that conducts automobile races in that 33 county. Of the amounts distributed, eligible county recipients 34 shall give special consideration to grants for projects that 35 -1- LSB 1521YC (3) 90 ec/rn 1/ 5

H.F. _____ include significant vertical infrastructure components designed 1 to enhance quality of life aspects within local communities. 2 In addition, as a condition of receiving a grant, the governing 3 body of a charitable organization receiving a grant shall 4 approve all expenditures of grant moneys and shall allow a 5 state audit of expenditures of all grant moneys. 6 Sec. 3. Section 99E.6, subsection 2, Code 2023, is amended 7 to read as follows: 8 2. The taxes imposed by this section for internet fantasy 9 sports contests authorized under this chapter shall be paid by 10 the internet fantasy sports contest service provider to the 11 treasurer of state as determined by the commission and shall be 12 credited as provided in section 8.57, subsection 6 deposited in 13 the county endowment fund created in section 15E.311 . 14 Sec. 4. Section 99F.11, subsection 5, paragraph b, Code 15 2023, is amended to read as follows: 16 b. The taxes imposed by this subsection for sports wagering 17 authorized under this chapter shall be paid by the licensed 18 operator to the treasurer of state as determined by the 19 commission and shall be credited as provided in section 8.57, 20 subsection 6 distributed as follows: 21 (1) One million seven hundred fifty thousand dollars of 22 taxes paid is appropriated each fiscal year to the department 23 of health and human services for purposes of the gambling 24 treatment program established in section 135.150 . 25 (2) One million dollars shall be deposited in the general 26 fund of the state for purposes of section 15E.305. 27 (3) Eighty-five percent of the remaining amount of taxes 28 paid after the distributions made in subparagraphs (1) and (2) 29 shall be deposited in the county endowment fund created in 30 section 15E.311. 31 (4) The remaining amount of taxes paid after the 32 distributions made in this paragraph shall be appropriated to 33 the economic development authority for distribution to each 34 qualified sponsoring organization licensed to operate gambling 35 -2- LSB 1521YC (3) 90 ec/rn 2/ 5

H.F. _____ games under this chapter on an equal basis. 1 DIVISION II 2 SPORTS WAGERING RECEIPTS FUND APPROPRIATION 3 Sec. 5. SPORTS WAGERING RECEIPTS FUND. There is 4 appropriated from the sports wagering receipts fund created in 5 section 8.57, subsection 6, to the general fund of the state 6 for the fiscal year beginning July 1, 2022, and ending June 30, 7 2023, the following amount to be used for purposes of section 8 15E.305: 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,000,000 10 Sec. 6. EFFECTIVE DATE. This division of this Act, being 11 deemed of immediate importance, takes effect upon enactment. 12 DIVISION III 13 ENDOW IOWA TAX CREDIT —— TAX YEAR 2023 14 Sec. 7. ENDOW IOWA TAX CREDIT —— TAX YEAR 2023. 15 Notwithstanding any provision of section 15E.305 to the 16 contrary, the aggregate amount of tax credits authorized 17 pursuant to section 15E.305 shall not exceed a total of 18 thirteen million dollars for the tax year beginning on or after 19 January 1, 2023, but before January 1, 2024. 20 Sec. 8. EFFECTIVE DATE. This division of this Act, being 21 deemed of immediate importance, takes effect upon enactment. 22 Sec. 9. RETROACTIVE APPLICABILITY. This division of this 23 Act applies retroactively to January 1, 2023, and applies to 24 the tax year beginning on or after January 1, 2023, but before 25 January 1, 2024. 26 DIVISION IV 27 ENDOW IOWA TAX CREDIT —— TAX YEARS BEGINNING ON OR AFTER TAX 28 YEAR 2024 29 Sec. 10. Section 15E.305, subsection 2, unnumbered 30 paragraph 1, Code 2023, is amended to read as follows: 31 The aggregate amount of tax credits authorized pursuant to 32 this section shall not exceed a total of six seven million 33 dollars annually. 34 Sec. 11. APPLICABILITY. This division of this Act applies 35 -3- LSB 1521YC (3) 90 ec/rn 3/ 5

H.F. _____ to tax years beginning on or after January 1, 2024. 1 EXPLANATION 2 The inclusion of this explanation does not constitute agreement with 3 the explanation’s substance by the members of the general assembly. 4 This bill concerns the distribution of tax receipts from 5 internet fantasy sports contests and sports wagering. The bill 6 is organized by divisions. 7 Division I of the bill provides that taxes imposed and 8 collected for internet fantasy sports contests shall be 9 deposited in the county endowment fund created in Code section 10 15E.311 and not the sports wagering receipts fund. The bill 11 also provides that taxes imposed and collected for sports 12 wagering shall not be deposited in the sports wagering receipts 13 fund. Instead, the bill provides that the first $1.75 million 14 of taxes paid on sports wagering shall be appropriated to 15 the department of health and human services for purposes of 16 the gambling treatment program, the next $1 million shall be 17 deposited in the general fund for purposes of the endow Iowa 18 tax credit, 85 percent of the remaining amount of taxes paid 19 shall be deposited in the county endowment fund created in 20 Code section 15E.311, and the remaining amount of taxes paid 21 after all other distributions are made shall be appropriated 22 to the economic development authority for equal distribution 23 to qualified sponsoring organizations licensed to operate 24 gambling games under Code chapter 99F. The bill provides that 25 for the fiscal year beginning July 1, 2023, any unobligated and 26 unencumbered moneys in the sports wagering receipts fund from 27 the previous fiscal year shall be appropriated to the county 28 endowment fund. The bill strikes a reference to the sports 29 wagering receipts fund in Code section 15E.311 and provides 30 that the sports wagering receipts fund is repealed June 30, 31 2024. 32 Division II of the bill appropriates $7 million from the 33 sports wagering receipts fund to the general fund for the 34 fiscal year beginning July 1, 2022, for purposes of the endow 35 -4- LSB 1521YC (3) 90 ec/rn 4/ 5

H.F. _____ Iowa tax credit. The division takes effect upon enactment. 1 Division III of the bill relates to the maximum amount of 2 tax credits authorized for the endow Iowa tax credit for the 3 tax year beginning on or after January 1, 2023, but before 4 January 1, 2024. The bill increases the maximum amount of tax 5 credits authorized for tax year 2023 from $6 million to $13 6 million. The division takes effect upon enactment and applies 7 retroactively to the tax year beginning on or after January 1, 8 2023, but before January 1, 2024. 9 Division IV of the bill relates to the maximum amount of tax 10 credits authorized for the endow Iowa tax credit for tax years 11 beginning on or after January 1, 2024. The bill increases 12 the maximum amount of tax credits authorized for tax years 13 beginning on or after January 1, 2024, to $7 million. The 14 division applies to tax years beginning on or after January 1, 15 2024. 16 -5- LSB 1521YC (3) 90 ec/rn 5/ 5