As one of the more successful legal sports betting markets in the US, Indiana’s monthly betting handle is derived from sports wagers at land-based retail venues as well as online through mobile sportsbook apps.
That has been a winning combination in more than a few states. This includes New Jersey, Nevada and Pennsylvania. These are the three biggest US markets for sports betting. All three also offer a full complement of iGaming options that couple online casinos with online sportsbooks.
It has become obvious to most Indiana lawmakers that adding online casino gambling to its existing online sports betting capabilities is a viable way to generate some much needed additional tax revenue.
With the beginning of the 2021 legislative session in most states, Indiana has added a iGaming bill to its agenda. State Sen. Jon Ford sees this direction as a “natural progression” for legal gambling in the state. He is the driving force behind a bill that would clear the way for online casino gambling.
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Sen. Ford added the following comments in a recent statement concerning his bill:
“The language in this bill is very, very similar to sports wagering, and many of the back office mechanisms in place for consumer protection, we already have in place for sports wagering. So, really a lot of the infrastructure’s already there.”
The bill up for consideration would legalize online slots and casino table games such as Blackjack and Roulette. It follows in the footsteps of previous legislation in 2019 that cleared the way for both land-based and online sports betting.
One of the main provisions would give each licensed land-based casino the opportunity to partner with up to three iGaming providers. This matches the three online skins available for sports betting.
The difference between the two would be the tax rate. State law calls for a tax rate of 9.5 percent on adjusted gross sports betting revenue. That rate would increase to 18 percent on any iGaming apps.
The breakdown of that rate would give the state 15 percent with the other three percent going to local municipalities with land based casino venues.
Currently, state casinos pay a 15 percent tax on their first $25 million of Adjusted Gross Revenue (AGR). This rate can increase all the way up to 40 percent at its highest level. That rate kicks in at $600 million in AGR.
The push towards iGaming started to gain traction last August. This was spearheaded by Dan Lee as the President and CEO of Full House Resorts. While some opposition remains. Mr. Lee fully expects the necessary legislation to pass and be implemented sometime this year.
Sen. Ford’s bill has been accompanied by HB 1406. State House Rep. Alan Morrison is the architect behind that piece of legislation.
Projections tied to HB 1406 have estimated that the total tax revenue generated by iGaming should fall between $42.9 million and $85.8 million by the fiscal year 2026. The negative impact on land-based casino taxes would be between $32.8 million and $64.5 Million.
The net gain from the combination of the two would be anywhere from $10.7 million and $21.7 million. The primary source of these gains would be a large influx of new players. Business models in other states such as New Jersey bear this out.