Indiana iGaming Could Inject State With Nearly $1B in New Tax Revenue

Posted on: January 18, 2024, 09:57h. 

Last updated on: January 18, 2024, 11:37h.

Indiana iGaming would almost immediately deliver the Hoosier State hundreds of millions of new tax dollars, should lawmakers in Indianapolis move to legalize online slot machines and table games.

Indiana iGaming online casino gambling
Indiana iGaming legislation won’t be passed in 2024. But a new study provides insights into how online casinos might benefit the state. Indiana could receive more than $900 million in iGaming taxes after the market’s first three years. (Image: Shutterstock)

In May 2023, the Indiana Gaming Commission (IGC) contracted the Spectrum Gaming Group, a Pennsylvania-based research firm, to study the impact of internet casino gaming. Spectrum recently provided the state gaming regulator with its findings, which show just how much Indiana could benefit from allowing people inside the state to gamble online.

Spectrum researchers concluded that Indiana would receive between $413 million and $929 million in new tax revenue during the first three years of iGaming. Those numbers are the average of varying tax scenarios that Indiana might place on online casinos. The tax assumptions on iGaming gross gaming revenue range from 20% to 45%.

The tax projections are also based on how Indiana might go about authorizing iGaming. Potential regulatory circumstances include allowing only the state’s 12 brick-and-mortar and riverboat casinos to run online gaming platforms, allowing the casinos to partner with multiple third-party iGaming operators, and allowing a fully open iGaming market, where any firm can seek licensure without a physical casino partnership.

No Impact to Current Casinos

Perhaps just as important as the tax benefit is determining if iGaming might hurt the state’s current casinos. The Spectrum report pointed to other states where iGaming is already regulated, and how their physical casinos haven’t seen gaming revenue decline as a result.

Based on our analysis of iGaming in other states, iGaming does not appear to have a negative effect on other forms of gaming,” the report explained. “That said, the iGaming results to date in other iGaming states suggest that it is possible that iGaming may be limiting the ordinary growth of retail casino revenues.”

Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, and West Virginia currently allow people of gambling age who are physically located within their borders to gamble online.

In New Jersey, the richest iGaming state, online casinos won more than $1.9 billion from players last year. That represented a nearly 16% year-over-year increase and marked the best year ever for the state’s iGaming platforms.

Online gaming began in New Jersey in 2013. State lawmakers last year voted to extend the iGaming law for another five years through November 2028.

New Jersey iGaming continues to flourish while the nine casinos down the shore in Atlantic City continue to stabilize, too. Brick-and-mortar slots and table games generated revenue of more than $2.84 billion last year, a 2.2% increase from 2022.

iGaming Downsides

Spectrum said there are potential downsides to legalizing iGaming, including concerns that being able to legally gamble on one’s computer or mobile device could lead to higher problem gaming rates. Spectrum cited a now-famous 2013 quote from the late Sheldon Adelson, the founder and former chairman and CEO of Las Vegas Sands.

“Click your mouse, lose your house’ isn’t a marketing slogan for advocates of legalized online gambling, but it should be,” Adelson declared more than a decade ago.

The odds of Indiana legalizing iGaming anytime soon are presumably long. Last year, state lawmakers agreed to mothball all gaming legislation until 2025. That’s after former state Rep. Sean Eberhart (R-Shelbyville) pleaded guilty to a federal corruption charge for agreeing to support gaming legislation beneficial to a casino company in exchange for future employment.