I fully agree. I didn't find anything in all of 99f that would have put any athletes in violation, however Section 7 was probably Iowa legislature attempting to follow NCAA rules (no idea why) which puts the sportsbooks in the spot they have to monitor the athletes or they risk losing their license.
From the way I see it the state legislature then made this whole scenario happen due to section 7 even though it is not against the law.
My personal opinion is that while the NCAA rules are outdated and should be changed, they are what they are and the players broke the rules and were caught. Which sucks, but the players were aware of the NCAA rules and so this is on them.