Any team that isn't a top seed is fortunate to make the tournament any year. That doesn't sound stupid to me. With Iowa States depth, they could be a severe ankle sprain away from making the NIT or even missing the NIT. Iowa State has a nice team, but there really are a lot better teams whether you want to believe it or not. Iowa isn't going to be the best team in the land next year, but on a given day they could beat anyone if they make the NCAA tournament. There are a couple of guys on the Iowa team that if they have an injury that takes them out for a few weeks it could cost Iowa a lot of games unless they can develop some depth at those positions. Where is Iowa States depth? Hopefully, Iowa and Iowa State can remain injury free this coming year and make the tournament, but I would say one of the reasons is that they were fortunate. Iowa does appear to have a lot more leeway than Iowa State in that regard.
If they will be fortunate to make the tournament then even without the 10:1 odds I'm giving you you'd have yourself a good bet. Since I'm willing to give you 10:1 odds you are either insane to not take the bet or your original logic is twisted. I've already figured out which one it is.
I'll make a separate bet that ISU gets a better seed than Iowa. I already know what your response will be.
I'll add a 3rd bet. 5:1 odds on the Iowa-ISU game. Iowa should have no trouble handling ISU from everything I've read from you.