The Iowa House of Representatives unanimously passed a bill that will change the distribution formula for taxes collected from sports wagering.
Iowa sports betting has been legal in the state since August 2019. However, the tax revenue has not gone into the state infrastructure fund. The bill would have all 99 Iowa counties, including those with state-licensed casinos, receiving the funds for quality-of-life improvement projects.
About $19.5 million dollars has piled up from Iowa sports betting apps and sportsbooks in Iowa casinos and currently sits in an escrow account. Sports betting is subject to a tax of about 6.75 percent.
The bill would send $1.8 million to the state’s gambling addiction treatment program. It would appropriate a one-time amount of $7 million to the Endow Iowa tax credit program and another $1 million to Endow Iowa, increasing the credit from $6 million to $7 million annually.
The remaining revenue would be divided between the 99 counties. Distribution would go to County Endowment Funds in 84 non-gaming counties and to Qualified Sponsoring Organizations in the 15 counties with gaming.
Tax Rates on Gambling in Iowa
- Riverboat and land-based casino revenue: 5% to 22%
- Racino revenue: 22% or 24%
- Sports Betting revenue: 6.75%
Currently, 84 counties without a casino receive 0.8 percent of the gambling revenue collected by the state. Last year that amounted to $160,000 for each county. They are required to distribute 75% of those funds to non-profits. The remaining 25% is held in a permanent endowment fund. This new legislation would add an additional source of funding distributed to all 99 counties’ endowment funds.
Since 2004, community foundations in 84 counties have received $136 million. The funds help to build infrastructure, increase tourism, address environmental needs, and bring cultural attractions to the area. The Qualified Sponsoring Organizations in the 15 gaming counties receive a portion of their respective casino’s gaming revenue. They are required to reinvest annually in numerous charitable and civic needs.
Iowa Sports Betting by the Numbers
- December 2022: $229.9 million
- January 2023: $233.6 million
- February 2023: $194 million
- March 2023: $233 million
The Iowa Racing and Gaming Commission reports that the 19 state-regulated casinos contributed $1 billion in economic impact to the state last year.
The bill, House File 710, will be considered by the state senate.