For the third straight year, a bill to bring internet casino gaming to Indiana failed to make it out of a House legislative committee in Indianapolis.
Rep. Ethan Manning, who chairs the House Public Policy Committee, never scheduled his bill — HB 1536 — to be heard before the committee, letting it languish past the Feb. 27 deadline for it to be approved by the House and then considered by the Senate. The bill would have allowed operators to offer online poker, roulette, slots, and blackjack in the Hoosier State, as well as digital lottery draw games and representations of scratch-off games.
The bill also contained provisions for live studio games, in which operators use live video streaming technology to conduct online wagering. Similar to sports wagering in Indiana, a licensee would have been allowed to have three online skins for casino gaming, offering the possibility of up to 36 online gaming sites through 12 current casino and racino licensees.
Manning’s bill called for a 20% tax on adjusted iGaming gross revenue while allowing operators up to $10 million in annual deductions for promotional credits.
The inability to move the bill out of committee was a blow for those wanting internet casino gaming to expand nationally, who had targeted Indiana as a state where prospects were good for such an outcome. Many pointed to the success Michigan is enjoying as an impetus for Indiana to move forward since the Wolverine State has generated more than $515 million in state taxes since launching online casinos in January 2021.
The Hoosier State, though, has a robust gaming scene without internet casino gaming. Sports wagering has generated nearly $11 billion handle and $86.4 million in state taxes since its September 2019 launch, while brick-and-mortar casinos average about $200 million in gaming revenue monthly.
Fiscal analysis stoked cannibalization concerns
Indiana has a notable casino scene, especially in the northwest part of the state where a sizable portion of patronage comes from the Chicago area and neighboring Illinois, thus providing revenue from non-residents. Any sort of iGaming that would negatively impact that revenue stream would be a cause for concern among legislators.
The fiscal note written by the Office of Fiscal Analysis and Management to accompany HB 1536 pointed to studies showing that up to 30% of internet casino gaming revenue is “displaced from existing casino revenues.” The analysis noted that percentage in Indiana could be higher given it is a more saturated market with 10 casinos and two racinos statewide.
The fiscal note painted a bleaker picture of revenue cannibalization than a report produced by Spectrum Gaming Analysis for the Indiana Gaming Commission last July, in which it estimated iGaming could generate $469 million in the first year of operation. The study likened Indiana’s potential iGaming market more to Pennsylvania’s than to those in Michigan and New Jersey, where centralized gambling locations in Detroit and Atlantic City showed a decline in brick-and-mortar casino revenue from 2019-21.
“I think what really changed the entire conversation was the horrible fiscal analysis,” Sen. Jon Ford told Inside Indiana Business. Ford, who authored iGaming bills the previous two sessions that met the same fate as Manning’s bill, also said there’s a perception that black market internet casino gaming is not a factor in Indiana, which he said contributed to the lack of urgency in bringing iGaming to the state.
Also lining up against the bill were bar and tavern owners and veterans fraternal organizations, who wanted the ability to offer video gaming terminal gambling to customers and members if the state was going to allow iGaming.
Photo: Getty Images