Indiana could rake in millions more off legalized Internet gambling than previously estimated, report says

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If Indiana legalizes internet gambling, it could rake in millions more in taxes than previously estimated, according to an Indiana Gaming Commission report publicly released last week.

Nonpartisan consultant Spectrum Gaming Group conducted the market and policy analysis on behalf of the gambling regulation agency.

But the rosy results are unlikely to make an impact for on the current legislative session.

Going up

The updated report found that Indiana could bring in between $413 million and $929 million over the first three years of legalization in “average” conditions at different possible tax rates.

That’s about 5% higher than predicted in the original 2022 report. The earlier analysis estimated tax revenue between $392 million and $883 million in average conditions for the same time period and sample rates.

Industry advocates have for several years wanted to legalize i-gaming. But federal investigations and scandals involving lawmakers, bribes and campaign finances have clouded the debate.

Republican legislative leaders have since declared a moratorium on expansion efforts.

The projections also don’t take into account the tax rate that the General Assembly might actually use.

House Bill 1536 in 2023’s session used a 20% rate, the lowest of the three rates (20%, 30%, 40%) considered in the analyses. House Bill 1356 in 2022 imposed a rate of just 18%.

The rate is key because—as both editions of the report observed—digital gaming requires fewer direct employees and little capital investment, compared to in-person casino gambling.

And if the rate is lower than what’s charged on in-person wagering, it could “incentivize operators to focus on i-gaming at the expense of retail casinos.”

Like the 2022 report, the update noted that live-dealer gaming could add “hundreds” of jobs, particularly if studios are required to be in Indiana. Live-dealer gaming allows players to make bets online while interacting with real-life dealers in real time through a live feed.

The update also considered three models for which entities can offer i-gaming, each with associated advantages and disadvantages:

  • An open one, available to all gaming companies.
  • A closed one, limiting licenses to a state’s casinos.
  • A hybrid one, in which third party gaming companies can offer iGaming through licensing agreements with casinos, called “skins.” Indiana adopted a hybrid model for digital sports betting.

The report explores additional regulatory details, like operator licensing fees, occupational licensing, new game certification, anti-money laundering measures and customer identification verification.

No changes expected in near future

Indiana’s industry has been rocked by recent scandals. One 2016 campaign finance scheme involved casino money and two former lawmakers: Brent Waltz and John Keeler. They were sentenced in 2022, although Waltz has since asked to overturn the sentence.

Another former lawmaker, Sean Eberhart, pleaded guilty in November in a quid pro quo: legislation favoring Spectacle Entertainment’s efforts to build casinos in Terre Haute and Gary, in exchange for a lucrative job and equity.

In reaction to Eberhart’s plea, leaders called off gambling expansions for at least the legislative session that began this month.

IGC Deputy Director Jenny Reske said the agency commissioned the study update before those announcements. But she said it would still be useful.

“We’ll continue to develop expertise on this. We’re regulatory professionals; we understand that we sometimes need to rise to the challenge of new legislation,” Reske told reporters at a December IGC meeting. “… So we’ll continue to focus on learning, on being up to the task, if the legislation does pass.”

The agency paid Spectrum Gaming Group nearly $75,000 for the first report and about $63,000 for the update, according to a contract and amendment on the state’s transparency portal.

The Indiana Capital Chronicle is an independent, not-for-profit news organization that covers state government, policy and elections.

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4 thoughts on “Indiana could rake in millions more off legalized Internet gambling than previously estimated, report says

  1. I’m honestly a little worried that all of this online gambling will lead a lot of people down a road of addiction they can’t handle. I’ve already had a friend lose his family because of sports betting. I actually enjoy gambling enough to have status at a couple casinos in Vegas that I go to 2-3 times/year. I really enjoy those trips and the adrenaline rush gambling gives you, but I’m smart enough to realize it wouldn’t be healthy to have access to that 24/7. I’m not sure whether I’m actually against allowing more online gambling, but it will certainly have a societal cost that government should think about. This is America though, and $$$$ talks louder than anyone.

  2. Weed should by-far be the first priority if lawmakers are after taxes, every state around us allows it and the state is just leaving money on the table. I also think online-gambling is a terrible idea, gambling should remain physical location based. Having 24/7 access with the extremely easy accessibility on your phone just sounds like a great way to bankrupt a lot of people and promote addiction. normally promote a free market but somethings just need to be regulated in certain ways. I think the state is just fine with having sports betting, Let’s not completely dive off the cliff.

    Side Personal Note: I feel like going to an actually casino and making an event out of it is half the fun. You get to people watch, often get free drinks, and interact with actual people. I don’t see the draw at all other than needing to scratch your gambling addiction itch.

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