Indiana Considering Legalizing Online Poker After Sports Betting Success

Indiana online casino poker 2021

Indiana has reaped the rewards of legalizing sports betting, and Hoosier State lawmakers are now setting their sights on legalising Indiana online poker sites and Indiana online casino to complement Indiana’s legal sports betting industry

The new effort, HB 1406, was filed by State Rep. Alan Morrison. The nuts and bolts of the legislation are:

  • A $500,000 operator license fee with a $50,000 charge to renew annually;
  • A $100,000 license fee for interactive gaming management service providers, with a $25,000 annual renewal fee;
  • Operator licenses are restricted to Indiana Casinos and Racinos;
  • Each licensee (up to 14) can operate up to three online gambling skins;
  • An 18% tax on adjusted gross revenue;
  • The bill calls for 3.33% of tax revenue to go to an Addiction Services Fund, with 25% of those funds must be spent on the prevention and treatment of compulsive gambling.

 Companion legislation, S 417, was filed by Indiana State Sen. John Ford. Ford has been a driving force to expand online gambling in Indiana – something this author has been pushing for since 2014.

The Indiana legislature is scheduled to adjourn at the end of April, so things will have to move fast for Indiana online poker and Indiana online casinos to become a reality in 2021.

Sports Betting Is Paying the Bills in the Hoosier State

Indiana legalized sports betting back in May 2019 and had its industry up and running by September. In 2020, the state’s first full year of sports betting, it posted some strong numbers, establishing itself as one of the top markets:

  • 2020 total handle = $1.8 billion
  • 2020 total sports betting revenue = $138.6 million
  • 2020 total tax revenue to Indiana = $13.2 million

The success of sports betting is almost certainly giving the current online casino and poker efforts a big boost.

Indiana Brings Up the C-Word

One potential sticking point can be found in a memo from the Office of Fiscal and Management Analysis, which includes the dreaded cannibalization concern.

According to the analysis memo:

Online casino games will displace some gambling activities occurring at brick-and-mortar casinos. Studies have concluded that up to 30% of new online gaming revenues are displaced from existing casino revenues.

The OFMA estimated online casinos could generate from $286-$572 million, with the stipulation that it would cannibalize land-based revenue by $114-$228 million annually (per their analysis). And because of the disparate tax rates (18% for online casinos and 30% for land-based casino revenue), the $51-$104 million in tax revenue from online casinos would only add $12-$27 million annually.

Of course, the evidence for that level of cannibalization hasn’t been realized in any other state with land-based casinos and online casinos. Dual operators in New Jersey and Pennsylvania have publicly stated that the opposite is true. All of the available evidence points to there being little crossover between land-based and online casino customers, and that online casino helps attract new customers.

As I wrote for FocusGN.com last year:

As former Caesars Senior Vice President David Satz told a Pennsylvania committee hearing in March 2017: CIE’s New Jersey experience was that 80% of online players were new customers. Of the 20% that were already in the company’s Total Rewards program database, 42% were inactive customers who re-activated after signing up online.

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