Iowa sports fans cheered for the 2019 legalization of sports betting for the love of the games. At the same time, the Iowa Senate was cheering for the increased tax revenue that will help balance the state’s books.
Both retail and online sports betting will contribute to the bottom line in Iowa. Early numbers are in, though with only a few apps available, this is far from the expected final tally.
On this page, we explore the tax revenue from sports betting in Iowa from several angles.
First, we cover the sources of revenue via the rates outlined in bill SF 617.
After that, we look at the first month of sports betting. By accounting for the population and comparing it with New Jersey, where sports betting has been running longer, we can get an idea of the long-term revenue levels.
Finally, we speculate how revenues might look if Iowa ever regulated online casino games.
Sports betting has a lower overall tax rate in Iowa than in many other states. It was set at 6.5% of net revenues in bill SF 617. Comparing it with Pennsylvania at 36% and New Jersey at 13% (8.5% for retail), this is a smaller percentage.
In addition to this tax, there are licensing fees for each online sportsbook. These are $45,000 per license, with an annual renewal fee of $10,000.
Each of the 18 casinos in Iowa can apply for two separate mobile betting licenses. This caps the maximum tax at 45×18 = $810,000.
This amount is only part of the tax take. Winnings from sports betting are also taxable, with limited scope to offset losses.
With the sportsbooks obliged to report on bigger wins, this could be a significant contribution to the state coffers. Unlike the licensing and reported taxes through the sportsbooks, adjustments to individual tax returns will be harder to estimate.
Finally, there are contributions from additional employment to consider. Sportsbooks will need tellers and additional service staff. Similarly, casinos will need to employ teams to work with their technology partners, working on promotions and cross over with the retail sportsbooks.
September 2019 was Iowa’s first full month of sports betting.
Retail sportsbooks launched at the end of August, with the first (William Hill) apps joining soon after.
It was a significant effort from Iowa casinos that were keen to launch in time for the start of the NFL season, a busy time for sports betting.
Revenues for September are based on a reported $40 million in turnover. With the 6.5% tax rate, this gives an unadjusted figure of $2.6 million.
There are many reasons to think this is on the low side of expectations for ongoing revenues.
Several factors play into this, including the late debut of apps, the need to complete in-person registration at the casino sportsbooks, and the lack of familiarity for many Iowans of the new betting formats.
This number also excludes those licensing fees and individual taxes from big winners.
Predicting future revenues from Iowa sports betting can be made more accurate by comparing it to a mature, regulated betting market.
New Jersey was the first to go live with both casino games and sports online and hosts a network of retail sportsbooks spanning Atlantic City and the major racetracks. NJ’s first online sportsbooks went live in 2018.
While the tax rate is different, revenues should be on par after accounting for the diverse-sized populations:
That would give a monthly revenue of $6.5 million per month.
The following is a breakdown of Iowa’s handle and revenue for the full month of November. Total handle for the month was over $59.3 million, while revenue slipped to $3.6 million.
|Casino||Combined Handle||Mobile Sports Betting Handle||Combined Revenue*||Mobile Sports Betting Revenue||Taxes (6.5%)|
|Catfish Bend Casino||$753,519||$26,263||$24,499||$4,383||$1,654|
|Diamond Jo -|
|Diamond Jo -|
|Grand Falls Casino|
|Hard Rock Casino||$1,695,244||N/A||$171,018||N/A||$11,531|
Bluffs Casino &
|Isle of Capri -|
|Isle Casino Hotel|
Racetrack & Casino
|Rhythm City Casino|
and Golf Resort
|Wild Rose - Clinton|
|Wild Rose -|
|Wild Rose -|
While sports betting is popular, this is not the biggest generator of revenue for state coffers.
Casino games made Iowa $300 million in tax, based on $1.5 billion in turnover in 2018. Add to this, the thousands of people employed by these venues, and tax on winnings reported via a WG2 form, and the total goes even higher.
Online casino gaming generates a considerable amount of tax revenue in New Jersey, with Pennsylvania (another recently regulated state) showing similar levels on a population-adjusted basis.
There is currently no movement in the Iowa Senate to expand bill SF 617 to include casino games.
Should the rollout of sports betting apps and websites be a success, there is hope that this could be put forward at some point down the line.
Online poker generates lower levels of revenue; this runs successfully alongside casino gaming in other states.
With fair tax rates and a significant take-up from casinos around Iowa, sports betting could bring in significant revenues to state coffers.
At 6.5%, this tax rate is lower than in other states.
Based on turnover, wins for individual players and the added employment taxation, sports betting could be a major boost for Iowa once it becomes established.