Indiana is on the shortlist of states most likely to pass online gambling legislation in 2023.
Sen. Jon Ford and Rep. Ethan Manning led a short-lived effort to do so in 2022. Unfortunately, that bill stalled almost as soon as it was introduced.
However, there’s reason to be more optimistic in 2023. Firstly, the longer the Hoosier State’s existing online sports betting market continues to be successful, the more politicians and the general public should warm to further expansion.
More importantly, 2023 is a budget year in Indiana, while 2022 was not. That means a longer legislative session, which correlates with better chances for a bill’s success. It also means lawmakers will be looking for new potential sources of revenue.
Sen. Ford and Rep. Manning will definitely be back at it again in the new year. Bonus has obtained a draft copy of the legislation they plan to file.
Some changes may still be made before the bill appears in the legislature. However, there’s already a lot to like about the current bill.
Online Casinos, Poker, and Online Instant Lottery
The proposed bill would be a comprehensive online gambling package.
Online poker is included under the bill’s definition of “interactive gaming,” so it would be legal and treated as another type of casino product. Live dealer casino gaming is also in the bill, which uses the phrase “live game simulcast” for such products.
All such gambling would have to be conducted in partnership with a land-based license holder. In Indiana, that means the state’s riverboat casinos and racetracks. Each of these would be eligible to partner with up to three online brands, or “skins.”
There are 12 eligible license holders, so in principle, the state could host up to 36 online casino brands. However, even the famously crowded New Jersey market hasn’t quite hit that number yet, so it’s unlikely that any interested operator would find itself excluded due to that limit.
All of that is pretty standard. More unusually, the bill would authorize the state lottery to sell tickets online. Currently, 14 states plus the District of Columbia have some form of online lottery. However, those have generally come about separately from other types of gambling expansion.
If the bill were to pass in its current form, Indiana would get both online draw ticket sales and online instant lottery games. Only seven US jurisdictions (six states plus DC) have those, but they’re very popular. Michigan, in particular, provides an example of how these games are a driver of growth for lottery revenue and can happily coexist with legal online casinos.
Reasonable Taxes and Fees
Indiana looks like it will tread the middle road regarding taxation and licensing fees. The bill proposes a $500,000 initial license fee plus $50,000 per year.
Adjusted gaming revenue would be taxed at a rate of 18%. That’s the same as what Connecticut has started with, though that state will raise it to 20% after five years. It’s higher than New Jersey and West Virginia yet lower than Michigan and Pennsylvania.
Like most states, Indiana would allow promotional deductions – money operators pay out through free play, no-deposit bonuses, and the like. (New Jersey is an exception to that trend, but it makes up for it with a lower tax rate.)
Where would that tax money go? The breakdown would be roughly as follows (rounded to the nearest half-percent):
- 80% to the state’s general coffers, available for any purpose
- 8.5% to the county where the retail partner is located
- 8.5% to the city where the retail partner is located
- 3% earmarked for gambling treatment, harm reduction and education
In the case of casinos outside of cities, 17% would be going to the county.
Indiana racetracks already must commit gambling revenues to support the horse racing industry. Companies that own both a racetrack and a riverboat casino will have to dedicate 12% of their total online gambling revenue to that end.
Provisions for Multi-State Gambling
Like the Illinois Internet Gaming Act, the Indiana bill accounts for recent rulings on the Wire Act.
Firstly, there’s no requirement that companies base their servers in the state. The servers can be “anywhere in the United States,” so long as they comply with federal law. That’s especially relevant when it comes to live dealer gaming. It means that companies like Evolution and Playtech can stream games from their existing studios in Pennsylvania, New Jersey and Michigan.
West Virginia has also adopted this model and began offering live dealer games this summer. With its small population, it would have been unlikely to get such games if it required in-state studios.
Poker players will also be happy to see that the bill expressly authorizes the Indiana Gaming Commission (IGC) to negotiate with other regulators to enter the Multi-State Internet Gaming Agreement or other similar compacts. Doing so will require the Governor’s approval. Still, this forward-looking language in the bill will likely help Indiana to follow in Michigan’s footsteps and allow its poker rooms to join multi-state networks.
Responsible Gambling and Security Measures
Naturally, the bill also includes provisions for player protection. A lot of this is standard, but a few details stand out in that regard.
Firstly, operators would be required to offer multi-factor authentication. That’s a policy New Jersey adopted in 2022 and that Pennsylvania expects to implement next year. It’s good to see Indiana writing it into the legislation from the start, as it will help to prevent scenarios like the recent credential-stuffing attack on DraftKings.
Self-exclusion would take place at both the operator and the state levels. Individual sites would have to provide temporary and permanent self-exclusion options for their players. At the same time, the state would maintain its own registry for individuals who want to exclude themselves from all sites at once.
Sites would also have to permit players to set deposit and loss limits.
Finally, the bill ends by declaring an “emergency.” This isn’t as dire as it sounds. It simply allows the IGC to fast-track its rules to get online casinos up and running within the year.
All-in-all, it’s a very solid bill. It doesn’t seek to reinvent the wheel, leaning instead on policies that have proven successful in other states. Indeed, it even instructs the IGC to follow other regulators’ lead wherever possible. At the same time, certain details – the money earmarked for gambling education, the multi-factor authentication requirement, and provisions for multi-state poker – show that its authors are paying attention to what’s happening elsewhere and that they understand the industry.
Whether they can persuade their peers to pass the bill is another matter. However, it’s a legislative effort that we’ll be following closely in 2023, and one that would be a giant leap forward for US regulated online gambling if it were to succeed.