The Iowa Lottery was created and signed into law in April 1985 through legislation. Sales of the Iowa Lottery began on August 22, 1985 at a kickoff celebration at the Iowa State Fair. An instant-scratch game called "Scratch, Match and Win" was the first product sold by the Iowa Lottery, and in its first week of play more than 6.4 million tickets were sold. Since its creation in 1985 the Iowa Lottery has raised nearly $1.2 billion dollars for state programs while paying out more than $2.4 billion in prizes to players.

When the Iowa Lottery was signed into law in 1985, lottery profits were earmarked for the Iowa Plan which is a long-term economic development program. Profits from the Iowa Lottery have benefited the state in many ways throughout the years since its institution. Iowa Lottery profits have been designated for environmental and cultural programs, the state general fund, support for veterans, backing for the Vision Iowa program and other significant programs. The profits Iowa Lottery receives from from two instant-scratch games and two pull-tab games each year are directed into the Iowa Veterans Trust Fund. The Iowa Lottery estimates that the games will provide about $2 million to $3 million in proceeds annually for the Veterans Trust Fund. The Veterans Trust Fund was created to provide assistance to qualified veterans to help pay for expenses such as job training or college tuition assistance; some dental, vision and hearing assistance; and individual or family counseling programs.

Since 1992, the Iowa state general fund has been used to pay for programs that benefit all Iowans through profits directed into the state fund from the Iowa Lottery. The Governor and Iowa Legislature allocate money from the general fund based on where they believe those funds are needed most. Vision Iowa is a program that was implemented in 2000 to create a tourist destination within the state and is directly funded from game revenue. Vision Iowa also assists with community attractions, as well as building and repairing schools. was implemented in 2000 to create tourism destinations in the state, assist with community attractions, and build and repair schools. However, as the program was being initiated, investors indicated there was a need to strengthen the Vision Iowa bonds by dedicated $20 million annually in lottery revenues as a backup. The legislation was approved to dedicate $15 million in lottery revenues to programs in community attractions for Iowa ans another $5 million to the Vision Iowa programs.