The Iowa Lottery experienced its best 12-month period ever during the Fiscal Year 2023, from July 1, 2022, through June 30, 2023. FY ‘23 returned records in:
- Sales ($481.5 million)
- Proceeds to state causes ($108.2 million)
- Prizes to players ($305.3 million)
- Commissions paid to Iowa businesses ($31.3 million)
“Thank you to Iowa Lottery players, retail partners, and the Lottery’s hard-working team, who all contributed to producing a record year of sales and proceeds for the good causes in Iowa that rely on lottery sales,” said Iowa Lottery CEO Matt Strawn. “Our team never forgets the ‘Iowa’ part of the Iowa Lottery as we meet our promise to responsibly offer entertaining games, products and promotions to the public. That focus continues to produce unprecedented results for Iowans.”
Even with these records, Iowa’s activity is in the bottom third of the 45 states (plus Washington D.C.) to offer its citizens lottery games. Of those states, fewer offer online lottery sales: seven have state-licensed online lotteries, and 16 allow sales through licensed third-party apps like Jackpocket.
Iowa offers neither. And much like Iowa online casinos, that hasn’t changed in recent years. Even as Iowa sports betting has contributed more than $30 million in tax money since 2019.
Iowa’s online lottery landscape
Iowa’s lottery history dates back to 1985, having raised more than $2.3 billion for programs like the Iowa Veterans Trust Fund and state General Fund. It has paid out more than $5.5 billion in prizes over its nearly 40 years in existence.
These numbers are relatively strong for a state with three million residents, but they still leave room for improvement in the digitally-driven world of 2023. Simply put, the Iowa Lottery is missing out on additional proceeds without online sales.
The discussion of online sales has been on the table for almost 15 years, with lottery officials making several key arguments in its favor. A Des Moines Register article from 2018 cited that Lottery Board members had been “briefed on the issue for nearly a decade.”
- Fewer people carry cash these days, not just millennials.
- A licensed, regulated online lottery platform creates a black-and-white landscape that disincentivizes illegal apps and resellers.
Double-digit increases and more
Last fiscal year’s record sales represented an 11.3% increase from $432.7 million in FY 2022. Proceeds grew by 10.5% and player prizes by 11.3%. Business commissions were up 10.8%.
These double-digit gains across the board were a win by any measure, but the good news continued beyond the numbers. Not only did lottery participation grow, it did so alongside a record number of statewide messages for March’s National Problem Gambling Awareness Month.
Additional data showed that retailers also achieved their KPI marks for security checks. And this all happened under budget.
Lottery sales may be important to funding state programs, but it’s even more crucial that players engage in responsible gambling practices.
Looking at the numbers
The Iowa Lottery attributed its record year to significant nationwide jackpots from Powerball and Mega Millions drawings and a resurgence in scratch-off games within the state.
In October 2022, both major drawings eclipsed $400 million simultaneously. Powerball eventually rose to $2.04 billion before a winning ticket hit a month later. The smaller, 13-state Lotto America also contributed, hitting a record $40.04 million jackpot before a Dubuque man hit the jackpot on April 1.
Scratch games, historically Iowa’s most popular category, fell in 2022 due to rising fuel prices and inflationary pressures. These eased over the past year as the Iowa Lottery has introduced new games, all leading to the rebound. The Iowa Lottery reported that scratch-ticket sales made up about 61% of all sales for the fiscal year.
Year-over-year lottery sales by product
- Scratch games: $293.6 million (+0.2% YoY)
- InstaPlay games: $31.8 million (+35.9% YoY)
- Pick 3: $9.1 million (-2.2% YoY)
- Powerball: $65.6 million (+23.5% YoY)
- Mega Millions: $43.8 million (+214.7% YoY)
- Pick 4: $5.8 million (+3.6% YoY)
- Lucky for Life: $8.4 million (+3.7% YoY)
- Lotto America: $20.4 million (+291.4% YoY)
- Pull-tab Games: $13 million (+2.4% YoY
Online sales would shatter current records
Back to the elephant in the room: how much is the Iowa Lottery leaving on the table in annual sales and revenue by remaining solely available in brick-and-mortar establishments?
Online lottery sales are expected to grow nearly 7% by 2027, reaching a market volume of $6.84 billion. Only seven states have licensed online lotteries.
Of those seven, New Hampshire and Kentucky provide the closest comparisons to the Hawkeye State. Others like Pennsylvania, New Jersey, Michigan, and Georgia have incomparable populations and metropolitan areas.
New Hampshire’s 1.4 million population is less than half of Iowa’s, yet its FY 2022 lottery sales were almost 29% greater. Similarly, Kentucky’s 4.5 million population is roughly 50% more than Iowa’s, and its FY ‘22 lottery sales more than tripled Iowa’s.
Jackpocket another promising option
Other states use services such as Jackpocket, which effectively act as a courier and purchase tickets on behalf of customers. Jackpocket is a legitimate option in the 16 jurisdictions to offer it.
Last year’s Powerball jackpots showed how impactful Jackpocket can be, too. Ticket sales on the app rose by 54% in October and accounted for about 15% of New York’s Powerball sales.
Of these states, Arkansas has the most similar population to Iowa (3 million). Its total lottery sales in FY ‘22 were $579.6 million, roughly 34% higher than Iowa’s.
States like Idaho came within 15% of Iowa’s sales ($376.3 million) despite having 60% as many people. Larger Jackpocket states like Arizona, Colorado, and Oregon outperformed Iowa per capita.
- Oregon: $1.67 billion in sales; 4.2 million residents
- Arizona: $1.37 billion in sales; 7.4 million residents
- Colorado: $826.9 million in sales; 5.8 million residents
Not every state fared as well, though. Minnesota ($740.1 million in sales; 5.7 million residents) and Nebraska ($202.2 million in sales; 2 million residents) showed that while Jackpocket can help boost sales, it is not a be-all-end-all solution.
Outliers included West Virginia ($1.38 billion in sales; 1.8 million residents) and New Mexico ($138.9 million in sales; 2.1 million residents).
