Gambling winnings are fully taxable in Iowa even if the winner is not an Iowa resident.
The gross receipts from almost all gambling activities conducted in Iowa are subject to state sales tax and local option sales tax, if any.
Individuals or groups conducting gambling activities must report and pay sales tax and local option tax, if any, on the gross receipts (not net receipts) of all gambling activities.
Most cities and rural areas of Iowa have the 1% local option sales tax in addition to the state sales tax. Local option sales tax applies if the event takes place in one of these jurisdictions. See Iowa Local Option Tax Information for more information and lists of jurisdictions that have local option sales tax.