Study Makes Case For Why Indiana Should Legalize iGaming

A new study commissioned by several trade organizations shows that the state of Indiana could generate $500 million in gross revenue and more than $100 million in tax revenue per year by legalizing iGaming.

The study goes on to explain that since Indiana already has the infrastructure for digital sports betting in place, it could easily add iGaming. Indiana lawmakers legalized sports wagering in the spring of 2019 and launched operators later that year. Since go-live in September 2019, the state has collected nearly $44 million in tax dollars based on a 9.5% tax rate.

Industry groups support legislation for legal iGaming filed last week. HB 1356, sponsored by Representatives Douglas Gutwein and Ethan Manning, would tax iGaming at 18%, and there is traditionally a bigger consumer base for online casino than sports betting. A second bill, HB 1337, filed by Rep. Alan Morrison, calls for an 18% tax rate and an expansion of the gaming commission board from seven members to nine. Both bills were assigned to the Committee on Public Policy.

Global Market Advisors, which provided analysis for the study, assumed a 15% tax rate in its calculations. The Casino Association of Indiana and iDEA Growth commissioned the study.

To date, Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, and West Virginia are the only states offering online slots, table games, and online poker, and lawmakers in both Connecticut and Michigan legalized it in tandem with digital sports betting. Online poker is legal in Nevada.

Indiana already has infrastructure in place

“Indiana already has the experience and infrastructure in place through online sports betting to support iGaming,” said John Pappas, iDEA’s state advocacy director. “Without even realizing it, Indiana consumers are using illegal online gaming sites that provide no consumer protections and zero state tax revenue. The state’s lawmakers can meet consumer demand by establishing a legal, competitive market that benefits the state economy and protects online players with regulatory safeguards.”

Per the study, if Indiana legalizes iGaming, it should only offer licenses to “respected operators with experience.” Furthermore, the state should allow operators to offer a diverse range of products, including online slots, house-banked and player-banked table games, and a live dealer option. Like sports betting, only players within the state would be able to participate and the Indiana Gaming Commission would be the regulator.

According to GMA’s analysis, states with legal iGaming generated $1.5 billion in revenue in 2020, and states averaged $300 million in monthly iGaming revenue over the last six months. Most of this money was generated in Michigan, New Jersey, and Pennsylvania — the states with the biggest populations and most competitive marketplaces. Indiana has approximately 6.7 million residents, making it about half as big as Pennsylvania in terms of population.

The tax rate in legal iGaming states ranges from a low of 15% of gross gaming revenue in New Jersey to a high of up to 28% (based on adjusted gross receipts) in Michigan. Under GMA’s analysis, iGaming would generate about $75.6 million in tax revenue for Indiana in Year 1 (2023) before breaking the $100 million per year threshold in Year 3 (2025).

Photo: Shutterstock