by Leslie Bonilla Muñiz, Indiana Capital Chronicle
January 16, 2024
If Indiana legalizes internet gambling, it could earn millions more in taxes than previously estimated, according to an Indiana Gaming Commission (IGC) report publicly released last week.
Nonpartisan consultant Spectrum Gaming Group conducted the market and policy analysis on behalf of the gambling regulation agency.
But the rosy results are unlikely to make an impact for at least the current legislative session.
Going up
The updated report found that Indiana could rake in between $413 million and $929 million over the first three years of legalization in “average” conditions at different possible tax rates.
That’s about 5% higher than predicted in the original 2022 report. The earlier analysis estimated tax revenue between $392 million and $883 million in average conditions for the same time period and sample rates.
Industry advocates have for several years wanted to legalize i-gaming. But federal investigations and scandals involving lawmakers, bribes and campaign finances have clouded the debate.
Republican legislative leaders have since declared a moratorium on expansion efforts.
Data visualization made with Flourish
The projections also don’t take into account the tax rate that the General Assembly might actually use.
House Bill 1536 in 2023’s session used a 20% rate, the lowest of the three rates (20%, 30%, 40%) considered in the analyses. House Bill 1356 in 2022 imposed a rate of just 18%.
The rate is key because — as both editions of the report observed — digital gaming requires fewer direct employees and little capital investment, compared to in-person casino gambling.
And if the rate is lower than what’s charged on in-person wagering, it could “incentivize operators to focus on i-gaming at the expense of retail casinos.”
Like the 2022 report, the update noted that live-dealer gaming could add “hundreds” of jobs, particularly if studios are required to be in Indiana. Live-dealer gaming allows players to make bets online while interacting with real-life dealers in real time through a live feed.
Indiana well-positioned to legalize iGaming, state study says
The update also considered three models for which entities can offer i-gaming, each with associated advantages and disadvantages:
An open one, available to all gaming companies.A closed one, limiting licenses to a state’s casinos.A hybrid one, in which third party gaming companies can offer iGaming through licensing agreements with casinos, called “skins.” Indiana adopted a hybrid model for digital sports betting.
The report explores additional regulatory details, like operator licensing fees, occupational licensing, new game certification, anti-money laundering measures and customer identification verification.
No changes expected in near future
Indiana’s industry has been rocked by recent scandals. One 2016 campaign finance scheme involved casino money and two former lawmakers: Brent Waltz and John Keeler. They were sentenced in 2022, although Waltz has since asked to overturn the sentence.
Another former lawmaker, Sean Eberhart, pleaded guilty in November in a quid pro quo: legislation favoring Spectacle Entertainment’s efforts to build casinos in Terre Haute and Gary, in exchange for a lucrative job and equity.
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In reaction to Eberhart’s plea, leaders called off gambling expansions for at least the legislative session that began this month.
IGC Deputy Director Jenny Reske said the agency commissioned the study update before those announcements. But she said it would still be useful.
“We’ll continue to develop expertise on this. We’re regulatory professionals; we understand that we sometimes need to rise to the challenge of new legislation,” Reske told reporters at a December IGC meeting. “… So we’ll continue to focus on learning, on being up to the task, if the legislation does pass.”
The agency paid Spectrum Gaming Group nearly $75,000 for the first report and about $63,000 for the update, according to a contract and amendment on the state’s transparency portal.
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1 comment
Company that makes its money off of supporting gambling surprisingly supports more gambling. Nothing to see here, move along.
This voluntary taxation of the stupid and addicted would be fine with me since I don’t gamble if it were not immorally usurious of people who are going to be looking for government assistance.
Vegas doesn’t keep the lights on because everyone leaves a winner, they keep the lights on because everyone leaves their bank account behind them as losers. Sure, a couple of folks “hit the jackpot” just to keep everyone else incentivized to continue throwing their money away (see the lottery) but the house (or state) always wins.