Fiscal Note
Fiscal Services Division
HF 673 – Sports Wagering Receipt and County Endowment Funds (LSB1521HV)
Staff Contact: Maria Wagenhofer (515.281.5270) maria.wagenhofer@legis.iowa.gov
Fiscal Note Version – New
Description
House File 673 relates to the distribution of tax receipts from Internet fantasy sports contests
and sports wagering. The Bill is comprised of five divisions, including:
• Division I relates to sports wagering receipts.
• Division II relates to Sports Wagering Receipts Fund appropriations.
• Division III relates to Endow Iowa Tax Credits in tax year (TY) 2023.
• Division IV relates to Endow Iowa Tax Credits beginning in TY 2024.
• Division V relates to Endow Iowa Tax Credits for gifts made prior to TY 2023.
Divisions I and II — Sports Wagering Receipts
Description
Division I appropriates the remaining unobligated and unencumbered moneys in the Sports
Wagering Receipts Fund (SWRF) to the County Endowment Fund in FY 2024 and repeals the
SWRF on June 30, 2024. This Division directs the taxes collected from Internet fantasy sports
contests to be deposited into the County Endowment Fund and directs the taxes collected from
sports wagering to be distributed as follows:
• $1.8 million to the Department of Health and Human Services (HHS) for the Gambling
Treatment Program.
• $1.0 million to the General Fund for the Endow Iowa Tax Credit.
• 85.0% of the remaining taxes to the County Endowment Fund.
• 15.0% of the remaining taxes to the Iowa Economic Development Authority (IEDA) for equal
distribution to each qualified sponsoring organization (QSO) licensed to operate gambling
games.
Division II appropriates $7.0 million in FY 2023 from the SWRF to the General Fund for
purposes of the Endow Iowa Tax Credit Program. Division II is effective upon enactment.
Background
The SWRF was established in FY 2020 by 2019 Iowa Acts, chapter 132 (Sports Wagering and
Fantasy Sports Act), which authorized sports wagering and fantasy sports contests in the State.
The Fund receives sports wagering taxes and Internet fantasy sports contest taxes. Table 1
includes the FY 2020, FY 2021, FY 2022, and FY 2023 year-to-date revenue and appropriations
from the SWRF.
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 Table0216
Fund: 1— Sports Wagering Receipts Fund
FY 2020 FY 2021 FY 2022 FY 2023*
Revenue
Beginning Account Balance $ 0 $ 1,499,735 $ 5,846,701 $ 12,228,656
Pari-Mutuel Receipts 1,788,241 6,091,872 9,603,539 10,358,560
Interest 11,494 5,094 28,416 215,090
Total Revenues $ 1,799,735 $ 7,596,701 $ 15,478,656 $ 22,802,306
Appropriations
Sports Tourism Program $ 0 $ 0 $ 1,500,000 $ 1,500,000
Gambling Treatment Program 300,000 1,750,000 1,750,000 1,750,000
Other 0 0 0 0
Total Appropriations $ 300,000 $ 1,750,000 $ 3,250,000 $ 3,250,000
Reversion 0 0 0 0
Ending Balance $ 1,499,735 $ 5,846,701 $ 12,228,656 $ 19,552,306
Source: Integrated Information for Iowa (I/3)
*Year-to-date as of April 10, 2023.
The Gambling Treatment Program is administered under the HHS, and the Sports Tourism
Program is administered under the IEDA.
The County Endowment Fund is administered under Iowa Code section 15E.311, and the
purpose of the Fund is to enhance the quality of life for citizens of Iowa by providing moneys to
new or existing citizen groups organized to establish county affiliate funds or community
foundations that will address countywide needs. The proceeds of this Fund are distributed
equally to counties that do not have a licensed casino for funding charitable organizations. Iowa
Code section 99F.11 allocates an amount equal to 0.8% of the adjusted gross receipts tax from
gambling games at Iowa casinos to this Fund. In FY 2022, the amount allocated to the Fund
from adjusted gross receipts tax was $13.9 million.
Under Iowa Code chapter 99F, a QSO is defined as a nonprofit corporation organized under the
laws of this State, whether or not it is exempt from federal income taxation, or a person or
association that can show to the satisfaction of the Iowa Racing and Gaming Commission that
the person or association is eligible for exemption from federal income taxation. Each casino
operating in Iowa has a QSO that receives a portion of the casino’s gaming revenue to reinvest
into charitable causes within their respective communities.
Assumptions
• The balance in the SWRF at the beginning of FY 2023 was approximately $12.2 million,
which was carried forward from the previous fiscal year.
• It is estimated that State tax receipts from sports wagering for April through June of
FY 2023 will match the revenue (approximately $2.1 million) collected for the same time
period in FY 2022, totaling approximately $12.5 million in sports wagering tax revenue for
FY 2023.
• It is assumed that sports wagering tax revenue and interest in FY 2024 and FY 2025 will
match the $12.7 million estimated to be collected in FY 2023.
• When accounting for the FY 2023 appropriations, it is estimated the SWRF will have a
balance of approximately $14.7 million at the beginning of FY 2024.
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Fiscal Impact
Table 2 provides the estimated sports wagering tax receipt revenue distributed to each program
under current law, as proposed under the Bill, and the fiscal impact of Divisions I and II of the
Bill.
Table 2 — Estimated Sports Wagering Tax Receipt Revenue Distribution
Internet Fantasy Sports Contest and Sports Wagering Tax Receipts — Current Law
(in m illions)
Program FY 2023 FY 2024 FY 2025
Sports Tourism Program $ 1.5 $ 0.0 $ 0.0
Gambling Treatment Program 1.8 0.0 0.0
Endow Iowa Tax Credit Program 0.0 0.0 0.0
County Endowment Fund 0.0 0.0 0.0
Qualified Sponsoring Organizations 0.0 0.0 0.0
Internet Fantasy Sports Contest and Sports Wagering Tax Receipts — Proposed
(in m illions)
Program FY 2023 FY 2024 FY 2025
Sports Tourism Program $ 1.5 $ 0.0 $ 0.0
Gambling Treatment Program 1.8 1.8 1.8
Endow Iowa Tax Credit Program 7.0 1.0 1.0
County Endowment Fund 0.0 22.7 8.0
Qualified Sponsoring Organizations 0.0 1.4 1.4
Internet Fantasy Sports Contest and Sports Wagering Tax Receipts — Difference
(in m illions)
Program FY 2023 FY 2024 FY 2025
Sports Tourism Program $ 0.0 $ 0.0 $ 0.0
Gambling Treatment Program 0.0 1.8 1.8
Endow Iowa Tax Credit Program 7.0 1.0 1.0
County Endowment Fund 0.0 22.7 8.0
Qualified Sponsoring Organizations 0.0 1.4 1.4
Divisions III to V — Endow Iowa Tax Credits
Description
Division III increases the maximum amount of tax credits authorized for TY 2023 from $6.0
million to $13.0 million for the Endow Iowa Tax Credit. This Division takes effect upon
enactment and applies retroactively to January 1, 2023.
Division IV increases the maximum tax credits authorized for tax years beginning on or after
January 1, 2024 (TY 2024), from $6.0 million to $7.0 million.
Division V provides that the changes made in 2022 Iowa Acts, chapter 1002, to the maximum
amount of tax credits authorized for the Endow Iowa Tax Credit do not apply to endowment gifts
made to an Endow Iowa qualified foundation prior to January 1, 2023. This Division takes effect
upon enactment and applies retroactively to January 1, 2023.
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Background
The Endow Iowa Tax Credit is equal to 25.0% of a taxpayer’s gift to a permanent endowment
fund within a qualified community foundation or community affiliate organization for the benefit
of Iowa charitable causes. The tax credit is allowed up to $100,000 of the aggregate annual
award limit for a single taxpayer. Ten percent of the aggregate annual award limit each year is
reserved for gifts in amounts of $30,000 or less, but after September 1, if the entire 10.0%
amount is not awarded, the remaining tax credits are available to any gift size.
The IEDA awards credits up to a fiscal year cap that is currently at $6.0 million. The tax credit
can be claimed against corporate income tax, individual income tax, franchise tax, insurance
premium tax, and money and credits taxes. Credits are awarded on a first-come, first-served
basis.
Assumptions
• The full amount of the annual cap will be awarded for TY 2023 and for each subsequent
year.
• Tax credits will begin to be awarded in 2023 to be first claimed against corporate income,
individual income, franchise, insurance premium, and moneys and credits taxes.
• Initial fiscal impact for claims under the Bill will occur in FY 2024.
• The tax credit is nonrefundable, and any credit in excess of the tax liability may be carried
forward for up to five years.
• Based on Department of Revenue historical claim data, 84.3% of the tax credit awards will
be claimed. The following timing of claims is assumed:
• Year 0: 0.2% of awards claimed
• Year 1: 40.5% of awards claimed
• Year 2: 30.6% of awards claimed
• Year 3: 6.0% of awards claimed
• Year 4: 3.1% of awards claimed
• Year 5: 1.4% of awards claimed
• Year 6: 2.2% of awards claimed
• Year 7: 0.3% of awards claimed
• According to the Department of Revenue, it is estimated that school district surtax collected
will be reduced by 2.5% due to the change in individual income tax liability.
Fiscal Impact
Table 3 includes the net fiscal impact to the General Fund for FY 2023 through FY 2028 when
including the increase to the General Fund from the sports wagering tax appropriations and
deposits provided for in Divisions I and II and the anticipated timing of the Endow Iowa Tax
Credit award claims from the increased award limit provided for in Divisions III and IV.
Table 3 — Estimated General Fund Fiscal Impact
(in millions)
Division I Division II Division III and IV
Sports Wagering SWRF Endow Iowa Tax Net Impact to
Tax Receipts Appropriation Credits General Fund
FY 2023 $ 0.0 $ 7.0 $ 0.0 $ 7.0
FY 2024 1.0 0.0 -2.8 -1.8
FY 2025 1.0 0.0 -2.5 -1.5
FY 2026 1.0 0.0 -1.1 -0.1
FY 2027 1.0 0.0 -1.0 0.0
FY 2028 1.0 0.0 -0.9 0.1
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The Department of Revenue also estimates the following decreases in school district surtax
collected:
• FY 2024: $71,000
• FY 2025: $64,000
• FY 2026: $28,000
• FY 2027: $25,000
• FY 2028: $23,000
Sources
Department of Revenue
Integrated Information for Iowa (I/3)
Iowa Racing and Gaming Commission sports wagering revenue reports
LSA analysis and calculations
/s/ Jennifer Acton
April 10, 2023
Doc ID 1371294
The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in
developing this fiscal note is available from the Fiscal Services Division of the Legislative Services
Agency upon request.
www.legis.iowa.gov
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Statutes affected:
Introduced: 8.57, 15E.311