Iowa Sportsbooks to Generate Billions in Bets and Millions in Tax Revenue for the State

On Thursday, when a number of physical and online sportsbooks launch, Iowa will become the 11th state to actively accept legal sports bets. And that will officially open the door to an industry that will eventually inject millions of dollars into state coffers.

"Once the Iowa market reaches maturity, its potential is on par with what Nevada is today," said Dustin Gouker, lead analyst for PlayIA.com and a veteran observer of the legal sports betting markets across the U.S. "That means a handle that will exceed $4 billion a year, and perhaps approach $5 billion. And as we have seen with the success of the early adopters of legal sports betting, such as New Jersey, the state should reap millions in tax revenue."

According to PlayIA.com:

• It will take Iowa five years or more to reach full maturity. But once it does, the state's handle should eclipse $4 billion and even approach $5 billion. Those estimates are based in part on the handle that Nevada generates with a population that is similar in size to Iowa.


• If Iowa reaches its full potential as a market, operators could generate more than $300 million a year in revenue, or "win" in gaming parlance.


• With a tax rate of 6.75%, Iowa would generate more than $20 million a year in tax revenue if the win reaches $300 million a year.

"We have seen in almost every legal jurisdiction that sports betting can be safely regulated and serve as an economic engine for the state, and Iowa should be no different," Gouker said.

If there is a downside for Iowa it is that the opportunity to generate significant revenue and handle will be muted to start. That is almost entirely due to the  requirement that online bettors sign up in-person at a physical sportsbook until early 2021, which will initially slow the industry's growth.

In New Jersey, where there is no such requirement, more than 80% of all sports bets are made online. That will be a level unreachable in Iowa until the in-person requirement is lifted.

"The requirement of in-person sign-ups until early 2021 will mean Iowa will not capture all of the market at the start," Gouker said. "But once that requirement sunsets, Iowa sports betting should really take off."