From the DPS' release:
"The evolution of gaming has given rise to emerging technologies that help regulate the industry and enforce the law. Iowa Administrative Rule 491-13.5 requires “the sportsbooks to implement location detection procedures to reasonably detect and dynamically monitor the location of a player attempting to place any wager” and to notify accountholders about information being gathered and shared.
Additionally, Iowa Code section 99F.7A requires sports wagering licensees to “employ reasonable steps to prohibit coaches, athletic trainers, officials, players, or other individuals who participate in an authorized sporting event that is the subject of sports wagering, from sports wagering.”
Analytical software programs developed by the licensees that provide mapping and anonymized data points were made available to the DCI to help identify anomalies suggesting suspicious or criminal activity that could undermine sports gambling in Iowa and ensure regulatory compliance."
Iowa Administrative Rule 491-13.5 imposes a duty upon sports books.
Iowa Code Section 99F.7A imposes duties upon sports wagering licensees.
DCI got its hands on geofencing software that had been developed by sports wagering licensees.
The release says that the software was "made available to the DCI to help identify anamolies suggesting suspicious or criminal activity that could undermine sports gambling in Iowa and ensure regulatory compliance."
With the caveat that I'm simply reading the release and haven't done an exhaustive analysis, my reading of the release suggests that sports books and sports wagering licensees are legally obligated to police themselves and implement measures to monitor gambling activity. What I don't see in the cited Administrative Rule or the cited section of the Iowa Code is conferring the authority to DPS/DCI to employ such technology whenever and wherever it wanted to do so.