Raising the stakes: Momentum builds to allow online casino gambling in Indiana

Indianapolis Business Journal
Raising the stakes: Momentum builds to allow online casino gambling in Indiana
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If you want to play online real-money casino games in the state of Indiana, you don’t have to travel to Michigan, where the practice is legal, to place your bets.

Hundreds of cyber casinos operated by offshore gambling sites allow anyone with a virtual private network to win or lose money without much fear of prosecution.

“We have to be honest with ourselves: People are doing it here in Indiana,” said state Sen. Jon Ford, a Republican from Terre Haute who authored a bill earlier this year that would have allowed Indiana casinos and racetracks to offer online casino games. “We theoretically already have iGaming. It’s a matter of putting it into a regulated environment similar to what we did with sports wagering.”

Ford is one of a growing number of elected officials, lobbyists and casino operators pushing Indiana and other states to allow brick-and-mortar casinos to host interactive online gambling, often called iGaming. The idea is to lure customers away from the black market and potentially bring in hundreds of millions of dollars in revenue for state government each year.

To bolster their case in Indiana, casino lobbyists point to a new study that finds that a legal online gambling market in the state would not negatively impact revenue at the Indiana’s 12 state-sanctioned casinos. That’s important, given that last year Indiana’s casinos generated $691 million in wagering taxes.

And online gambling could add to the total.

In February, the Indiana Gaming Commission hired Pennsylvania-based Spectrum Gaming Group LLC to study internet casino gambling. The consulting firm found that Indiana could bring in $392 million to $883 million in tax revenue over a three-year period, depending on the tax rate the state applies to online wagering.

“The findings in the report mirror what we as an industry have been telling policymakers for the last several years” said Matt Bell, president and CEO of the Casino Association of Indiana. Online casino gambling “is a viable market for Indiana and can be a profitable endeavor for casino gaming properties in Indiana, and it can do that without cannibalizing business from brick-and-mortar casinos.”

There are six states–Connecticut, Delaware, Michigan, New Jersey, Pennsylvania and West Virginia–that offer the full spectrum of online gambling, from virtual slot machines to online card games. Nevada also allows online gambling but limits it to online poker.

Adopting the sportsbetting model

Recent history would suggest Indiana is poised to join the small roster of states to legalize online gambling.

In 2019, Indiana joined Montana to become only the second state to legalize sports betting after the U.S. Supreme Court struck down the Professional and Amateur Sports Protection Act, which had effectively outlawed sports betting nationwide.

In the three years and four months since wagering on sports was legalized, Hoosiers have placed more than $4 billion in bets, and the state has realized more than $62 million in sports wagering tax revenues, according to the Indiana Gaming Commission.

While states differ in their approach to regulating online gambling, there are three basic models: The open model, which allows any company to offer online gambling; the closed model, which limits licensure to state casinos; and the hybrid model, which requires third-party companies to offer digital gambling through licensing agreements–also called “skins”–with existing casinos.

Indiana’s sports betting framework allowed existing land-based casinos to partner with third-party sportsbooks, such as FanDuel and DraftKings, to ensure the state’s existing casinos would not be hurt by the introduction of sports betting.

Casino operators say they would benefit if a similar model was applied to legal online casino gambling.

“Because of all the money that we as an industry have invested in brick and mortar … we would hope that online gaming expansion would work through us like it did with sports betting,” said Alex Stolyar, chief development officer for Full House Resorts, which owns Rising Star Casino in southeastern Indiana.

Earlier this year, the Hoosier Lottery announced plans to offer internet games, a move that angered retail lottery ticket vendors. That prompted lawmakers to step in and pass legislation requiring legislative approval before the State Lottery Commission can begin online gambling or ticket sales.

Ford, one of several Indiana lawmakers to introduce online casino bills earlier this year, declined to say whether he planned to take the issue up next year, though he expects the Indiana Gaming Commission’s recent study to serve as an impetus for the topic to come up again.

The majority of people who play online casino games fall between the ages of 21 and 39, according to the state’s report, a demographic the casino industry has struggled to attract.

“It brings a new, younger demographic to the marketplace that every industry is struggling to connect with,” Ford said of online casino games. “I think it’s very clear that younger generations want to do things on their mobile phones or through a digital process.”

It also would add another revenue stream to a growing pot of money.

The $691 million in taxes Indiana collected from its 12 casinos in the last fiscal year was up nearly 19% from about $583 million in fiscal year 2021, according to an Indiana Gaming Commission annual report released in September.

Senate President Pro Tempore Rod Bray told IBJ that while conversations about internet casino gambling remain ongoing, it’s too early to say whether the concept could win the General Assembly’s approval.

Funding recommended for addiction treatment

If Indiana goes forward with allowing online casino games, it should dedicate a portion of its new revenue stream to gambling treatment and addiction services, said Christina Gray, executive director of the Indiana Council on Problem Gambling.

Her organization acts as a resource and advocate for people struggling with gambling addiction and their family members, although she stresses that it does not take a position on the legalization of gambling.

“Ninety-five percent of people can do it responsibly,” Gray says. “We’re here to advocate for the 4 to 5% that may have a problem.”

Gray believes that legalizing online casino gambling could open the door for more young people to become addicted.

“You’re legalizing it for someone out there that may not go to a brick-and-mortar,” Gray said. “I think the possibility is there that more people will have problems.”

When it comes to funding for gambling addiction services, the most recently proposed online casino bills mimic the same language as the sports betting legislation, which allocates just over 3% of its revenue stream to such programs.

If online casino gambling becomes legal, Gray hopes that lawmakers will consider allocating a larger funding pot to help people struggling with problem gambling.•