Indiana is considering the legalization of internet gambling, and a recent report from the Indiana Gaming Commission suggested that the potential tax revenue could far exceed previous estimates.
The nonpartisan consultant Spectrum Gaming Group conducted a thorough analysis of the market and policy implications of legalizing internet gambling in Indiana. While these findings are promising, it is unlikely that they will have an immediate impact on the current legislative session.
The updated report from Spectrum indicates that if Indiana were to legalize internet gambling, the state could generate between $413 million and $929 million in tax revenue over the first three years. These estimates are based on different possible tax rates and assume “average” conditions.
Interestingly, these figures are approximately 5 percent higher than the predictions made in the original 2022 report, which projected tax revenue between $392 million and $883 million.
Despite the positive findings of the report, the current legislative session may not see immediate action on legalizing internet gambling in Indiana. Republican legislative leaders have declared a moratorium on any expansion efforts. However, the updated report may pave the way for future discussions and considerations in subsequent legislative sessions.
The General Assembly has yet to determine the specific tax rate that would be imposed on internet gambling activities. House Bill 1536 in the 2023 session proposed a tax rate of 20 percent, the lowest among the three rates (20 percent, 30 percent, 40 percent) considered in the analyses. Similarly, House Bill 1356 in 2022 suggested a tax rate of just 18 percent.
The report also examined the potential for job creation in the event of legalized internet gambling in Indiana. Live-dealer gaming, a popular form of online gambling, could lead to the creation of “hundreds” of jobs, particularly if studios are required to be located within Indiana. Live-dealer gaming allows players to make online bets while interacting with real-life dealers in real-time through a live feed. This immersive experience has gained popularity among online gamblers and could contribute to the growth of the industry in Indiana.
The report considers three different models for offering internet gambling, each with its own advantages and disadvantages. These included an open model, closed model and hybrid model.
In addition to tax rates and licensing models, the report delved into various regulatory considerations that must be addressed when legalizing internet gambling. These considerations included: operator licensing fees, occupational licensing, new game certification, anti-money laundering and customer identification verification.
The Indiana gambling industry has faced significant challenges in recent years, including scandals involving campaign finances and bribery. In 2016, a campaign finance scheme involving casino money and two former lawmakers, Brent Waltz and John Keeler, shook the industry. Both individuals were sentenced in 2022, though Waltz has since sought to overturn his sentence.
Another former lawmaker, Sean Eberhart, pleaded guilty in November in a quid pro quo arrangement, favoring Spectacle Entertainment’s casino development efforts in Terre Haute and Gary.
