Study Says Indiana Ready for iGaming

A study released by the Indiana Gaming Commission (l.) predicts that the introduction of internet gaming would be a smooth process, and would bring in millions in incremental revenue to the state.

A 103-page study released last week by the Indiana Gaming Commission predicts a “relatively smooth process” should the state legalize online gaming, and added that iGaming would bring in hundreds of millions in incremental tax revenue without cannibalizing the state’s brick-and-mortar casino revenues.

The process, according to the study, will be helped by the fact that the state has already introduced online sports betting, and therefore its internet gaming regulatory structure is already in place.

The study estimates that the state would earn between $341 million and $943 million in taxes off iGaming over three years, depending on the rate adopted, according to consultant Spectrum Gaming Group, which conducted the study on the state’s behalf.

To allay fears of cannibalization of the land-based casino industry, the study pointed to other states that have authorized iGaming. Based on data from the six states that have both iGaming and brick-and-mortar casinos—Connecticut, Delaware, Michigan, New Jersey, Pennsylvania and West Virginia—the report predicts little or no adverse effects from iGaming to the state’s 12 casinos, which earned $700 million in taxes last year.

“There’s a viable iGaming market in Indiana that is untapped,” said Matt Bell, president and CEO of the Casino Association of Indiana, according to WNDU-TV. “Indiana can act to move into that space without cannibalizing business from its brick-and-mortar casinos.”

Factors that could affect that opinion involve the structure of a legal iGaming business in Indiana—a model that limits licensing to current casino licensees, an open system available to all gaming companies, or a hybrid of the two in which third-party operators and suppliers partner with existing casinos to run sports betting.

The latter model is the one adopted for sports betting in Indiana, and is also the model in most current iGaming markets, including New Jersey and Pennsylvania.

“I would say that that model, from a market perspective, has proven very successful, with Hoosiers wagering more than $4 billion in sports contests in what, three years and a month?” Bell said. “Our state has experience with a hybrid model, our operators have experience with a hybrid model; I think there would be a level of comfort with that, from an industry perspective.”

Since digital gaming requires fewer direct employees and little capital investment, the study recommended a low tax rate. Bell said the Casino Association recommends tax rates of between 15 percent and 20 percent.

The report also said inclusion of live-dealer gaming could create more jobs—“meaningful employment impacts,” creating “many hundreds of jobs,” according to the report. Four of the five states with live-dealer gaming require the purpose-built studios to be located in-state, to keep the economic benefits within their borders.

Without live-dealer gaming, iGaming would have “no meaningful impact” on direct casino employment, but would create opportunities within iGaming operations.

The report also emphasizes the importance of including safeguards against problem gambling. “The authorization of iGaming would mean that, potentially, every Indiana adult would have a full suite of casino games in his or her pocket, via one or more gambling apps on a mobile phone,” the report said. However, it noted the state’s mature casino industry and digital sports betting, which gives the industry a head-start in promoting responsible gaming.

The report said the state is “well-positioned to integrate iGaming with its existing responsible-gaming measures.”

The report explores additional regulatory details, like operator licensing fees, occupational licensing, new game certification, anti-money laundering measures and customer identification verification.

State officials hope the report will contribute to iGaming legalization after a first attempt this year failed to pass the legislature.