September was a big month for Iowa, becoming one of the few states to currently offer legal sports betting in the United States. They set a new record for sports gambling revenue, raking in a total of $210 million, according to their Racing and Gaming Administrator, Brian Ohrilko. It is a number that shatters their previous benchmark, and one that is also, by far, the surest sign the gambling and casino industry is back on the come-up after a somewhat rough year-and-a-half.
You'd think the state would be celebrating, right? Wrong. Iowa has set its sports gambling revenue record but remains uncertain about its future. Here's why.
Iowa Sports-Gambling Record Comes with an Asterisk
People see that $210 million figure for the month of September and obviously think that Iowa is killing it on the legal sports betting front. That's apparently not the case.
“It’s important to note that sports wagering and the revenue that is generated from sports wagering is really a very small portion of the overall revenue in the casino industry,” Ohrilko said of the landmark revenue performance, per Radio Iowa. "When you look at casino numbers and casino numbers for this month—which was $139 million in overall net receipts...And so, it really is just a small portion of the profits and revenue that casinos make."
The exact numbers on how much sports-betting revenue came through Iowa are fuzzy. The state has estimated it at around $6 million—or less than 4.5 percent of the total cash flow coming through casinos.
That's a very, very small piece of the pie, indeed.
Why is Iowa's Sports-Betting Revenue So Low?
There is no one answer as to why Iowa's sports-gambling-revenue record is actually a relatively modest accomplishment. It's a conflation of factors.
Chief among them is intense competition. There are so many top online sportsbooks nowadays that people have options. They don't actually have to go through one of Iowa's casino fronts.
At least some of the lag, if not a sizable portion of it, is also owed to a general lack of knowledge and the overall newness of sports betting in the state. Iowa did not green light sports wagering until August 2019, which means their operations have barely been up for a year. It also just so happens the onset of their legal sports betting coincided with the apex of the coronavirus pandemic.
Just as was the case in Las Vegas sports betting, on-site casinos, and sportsbooks, everything was closed for a huge chunk of 2019, including the back end of the calendar when Iowa first opened its sports-gambling doors. The struggle didn't stop there, either.
The 2020 calendar year was yet another rough one for the gambling industry, as it continued to reel from a slumping economy. Heck, the sports-wagering business isn't even all the way back as of today. There are still ramifications and lingering effects being felt. And if the current economic climate is still impacting established sports-betting hubs, it makes sense that a relatively fresh addition to the fold like Iowa isn't yet seeing the most lucrative returns.
Should Iowa be Concerned About Sports Betting Profits?
The short answer: No.
Unlike many other states, Iowa didn't get into the sports gambling business as a primary draw. They aren't home to a ton of major sports teams that can help drive up their sports-betting profits. Their main attractions are college football and college basketball, plus a little bit of minor league baseball. Plenty of professional sports fans still call Iowa home, but they just don't have the in-built sports-wagering demographic that other markets enjoy.
Instead, Iowa legalized sports betting to simply increase the attractiveness of its casinos. In their eyes, sports gambling is just another service they offer to ensure they cover the full spectrum. The real hope is that their casinos will secure more foot traffic when customers can do everything from slots and table games to wager on sports.
Furthermore, Iowa has been able to profit off sports betting in a way not directly linked to the casino revenue. Bigger online sportsbooks are now paying for advertisements in their market. The state gets a cut of those proceeds, too. The Racing and Gaming Administration in Iowa didn't provide an exact figure of how much they made off sports-betting advertisements, but they did note it reached an unexpectedly record high during the first month of the NFL regular season.
Room for Sports Betting Growth in Iowa
Reading all of this might give you the idea Iowa should be pessimistic about their sports-betting future—like they've already hit their ceiling despite being up and running for barely 12 months. That's not the case.
The economy should improve as the pandemic settles down. Equally important: More and more people will continue to realize Iowa has legalized sports betting at all. The first year or two is never supposed to be the most lucrative when it comes to sports betting revenue. Awareness during this time is tapered more than the novelty of its introduction is inflated.
Put another way, if Iowa parlayed $210 million of overall sports betting into $6 million of extra profits in Month No. 14 of its legalization, just think of where that figure will stand two, three, even four years down the road.
Check out this list of the top online sportsbooks so you can find which one to use when you can't make it to a brick-and-mortar casino:
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