I'm guessing he said Iowa State as a random, mediocre program, to show that he was so desperate he would bet on anything. Notice he said "Iowa State covered" not "Iowa State won"
Good find by the OP. MadTV is one of those shows that I always enjoyed when I watched it, but for some reason just never made it a point to watch it regularly. I'm not sure why that is... and it looks like that was the series finale? A lot of funny people on that show- Artie, Bobby Lee, Michael McDonald, Mo Collins, Alex Borstein... good stuff.
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