Indiana casinos could offer digital versions of their games over the internet under a new bill filed in Indiana.
As anticipated, an online casino proposal has hit the table in Indianapolis. The state legalized online sports gambling in 2019 and recently saw a state record $313 million wagered on sports during December. Many of the same companies that offer sports betting within Indiana over mobile devices and computers are involved with online casino gaming in other legal markets.
The move by Hoosier State policymakers comes shortly before neighboring Michigan is expected to kick off online gambling. The Wolverine State legalized betting on sports, casino, and poker over the web. The COVID-19 pandemic has taken a giant bite out of Indiana casino gaming revenue (as is the case nationwide), priming lawmakers to entertain expanding gambling once again.
Previously, Gov. Eric Holcomb indicated he’d like to wait a little longer, as new brick-and-mortar casinos are in the process of coming to fruition under the 2019 gambling package, before beefing up the state’s casino industry once more. However, Holcomb is definitely interested in online casinos for his state. He made the comments about waiting another couple years for online casinos during his successful re-election campaign, so it is possible he was not being totally candid about the legislative timeline and could want it sooner. State-sanctioned gambling is a political issue that some are staunchly opposed to.
Under House Bill No. 1406 of the current legislative session, Indiana would impose an 18% tax on adjusted gross receipts for online casino gambling, nearly double the 9.5% rate the state charges for sports betting. Additionally, it would cost $500,000 initially for an operator license and $50,000 annually to renew. Other fees would be applied to other firms involved with the activity.
State Rep. Alan Morrison, a Republican, was the legislator who filed the bill.
Just like sports betting, would-be gamblers could register and fund an online casino account remotely without having to visit a retail casino, but they could do it in person if they wish.
Projected market size
According to a fiscal note on the bill, Indiana is projecting annual AGR by the fifth year of online casino gaming to be between $286 million and $572 million. For comparison, New Jersey online casino operator revenue was $870.8 million through the first 11 months of 2020.
Indiana projects that online casinos would reduce AGR for the retail casinos by $114 million to $228 million annually. In 2019, a year without a pandemic, Indiana casinos reported nearly $2.2 billion in gaming revenue. Winnings were off by about 25% in 2020.
With the brick-and-mortar properties paying a higher tax rate than what is proposed in the online casino bill, Indiana estimates that the net gaming tax revenue would be between $12 million and $27 million in the fifth year of legalization. That’s not a ton, but it’s meaningful.
It is worth noting that some Hoosiers are currently playing poker and other online casino games via offshore, illicit platforms, entities that pay no taxes to the state.
A little more than 3% of the state’s tax revenue would be used to help stem problem gambling activity.
Timeline for implementation
If the measure clears the legislature and is approved by the governor, the Indiana Gaming Commission could start accepting applications for online casino gaming licenses on July 1. A casino could commence online casino gambling, subject to regulatory approval, on Sept. 1.
Indiana had a very similar timeline for sports betting, with online wagering kicking off in October 2019, one month after retail sportsbooks opened. Indiana has shown it can move more rapidly with implementing a new gambling statute than some other states in the nation.
Indiana’s 2021 legislative session is slated to adjourn on April 29, providing a nearly four-month time frame to pass the bill. A new proposal would have to be filed in 2022 if HB 1406 fails to gain traction.
With the governor and at least some policymakers already on board with online casinos, as well as Indiana online sportsbooks being eager to offer their other verticals, it’s almost surely a matter of when, not if.
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