No erosion in Iowa Lottery sales despite surging sports gambling

Iowans are betting nearly $10 million a day on sports, but that hasn’t had an impact — at least so far — on the state’s 36-year-old Iowa Lottery sales.

Iowa Lottery sales have continued to be “strong and resilient,” totaling $178.5 million in the first five months of fiscal 2022 — a 6.7 percent increase from the same period a year earlier, Lottery Chief Executive Officer Matt Strawn said Thursday.

While there’s been no erosion in lottery sales since legal sports betting came online in Iowa in August 2019, Strawn said he’s monitoring the growth in sports betting and the increased competition for consumers’ discretionary entertainment dollars.

Earlier this month, the Iowa Racing and Gaming Commission reported Iowans bet an average of $9.6 million a day on sports during November’s frenzied college and professional sports seasons. That $287 million was another monthly record, with revenue approaching $20 million. That pushed the wagering handle above $975 million for the fiscal year that began July 1 and put Iowa within reach of $2 billion in betting for the calendar year if there’s another strong showing in December

Lottery sales average about $1.1 million a week and are keeping on pace with fiscal 2021, which was a record-setting year, Strawn said.

The success of sports betting didn’t come as a surprise to the Iowa Lottery, but it does increase pressure to understand the competitive landscape and make sure lottery marketing is connecting with Iowans, Strawn said.

“We need to be increasingly nimble and able to respond so we can deliver on the Lottery promise to those good causes that we support,” he said. That would include the state, which has received $41.1 million from lottery sales since July 1. That exceeded projections by 37 percent.

While legalized sports betting may be relatively new in Iowa, Lottery Vice President for External Affairs Mary Neubauer told the board that gambling on sports is not new.

“I think everyone knew that it was occurring in large numbers,” Neubauer said, “and the impact of legalizing sports betting was to move a lot of those folks into a regulated marketplace for more consumer protection.”

The lottery has faced the economic challenges from inflation and supply-chain disruptions, Strawn said. However, unlike consumer goods and household staples that are seeing upward price pressures, “a $5 Iowa Lottery scratch ticket still is a $5 scratch ticket. And it still only costs $2 for a chance at a life-changing Powerball jackpot prize.”

However, Strawn does expect sales to level off for the remainder of the fiscal year. In January 2021, both the Mega Millions and Powerball games had jackpots approaching $1 billion. Absent jackpots of that size, lotto sales “will be very hard-pressed” to maintain double digit year-over-year percentage growth.

Lotto ticket sales are up 39 percent through November and account for nearly 25 percent of all fiscal 2022 lottery sales to date, Strawn reported. Scratch ticket sales have topped $120 million for the first five months of the fiscal year. The three-tenths of a percent growth in scratch ticket sales follows an increase of more than 20 percent in the fiscal year that ended June 30.

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