A new bill in Indiana aims to bring Video Gaming Terminals (VGTs) to the Hoosier State.
VGTs bear a superficial resemblance to slot machines but use different math. Whereas each spin of a slot machine is independent, VGTs select prizes from a limited pool, much like scratch lottery tickets. They then determine what combination of symbols to display based on the prize rather than the other way around.
According to the bill supporters, installing VGTs will bring the state millions in revenue. Also, VGTs will give many small businesses another income stream and generate thousands of jobs. Moreover, residents will get more playing options.
Proponents also hope that the success of Indiana sports betting will help to persuade lawmakers in the state’s Congress.
VGTs Bill Details
The bill, HB 1548, plans for a 30% tax on VGTs revenue. That’s lower than neighboring Illinois, which imposes a 34% tax on the 45,000 machines in the state. Illinois has been successful with VGTs, and in December alone, it collected $67 million in tax revenue.
Only certain types of properties would have the right to install VGTs:
- Veterans organizations
- Fraternal organizations
- Establishments with a 3-way liquor license
- Truck stops meeting a minimum level of diesel sales
Establishments with a 3-way liquor license are those that can sell beer, wine, and hard liquor. That includes restaurants and bars. HB 1548 has additional restrictions on installing the machines, including where such establishments can place them.
The bill would require that VGTs:
- Be located away from entrances.
- Not be in areas where minors might be present.
- Not directly dispense cash.
- Be visually supervised at all times by an employee over 21.
- Be serviced regularly and receive software updates.
- Have a maximum bet of $2, a maximum payout of $599, and a return-to-player (RTP) between 80% and 95%.
After the state’s 30% cut, operators and property owners would split the revenue equally. Operators would be responsible for all upfront costs, easing the burden on local businesses.
Proponents of the bill point out the potential benefits of VGTs to Indiana’s economy. They claim VGTs will create 7,100 direct and 22,000 indirect jobs. Estimates of the financial benefits are $25 million in immediate tax income from the initial equipment purchase plus $105 million annually from the state’s share of gambling revenue. Numbers from Illinois suggest that could even be an underestimate.
Indiana Online Casinos Are Also On The Agenda
The VGTs bill is not the only gaming legislation on the agenda in Indiana. An online casino bill is also in the state Congress, and the outlook is positive. Rep. Ethan Manning introduced HB1536 in December, aiming to legalize online casinos. That is the third try for Indiana, but 2023 looks more promising than previous years.
Manning introduced the bill much earlier, giving it more time to pass each step. On Jan.19th, the bill went to Indiana General Assembly, marking the first step in the process. Next, it must move through the House and into the Senate. The crossover must occur by Feb 27, and online casinos could launch as early as Sep 1 if the bill were to pass.
Some highlights of HB 1536 include the following:
- 20% tax rate
- 10% of tax revenue to go into an addiction services fund
- Launch of iLottery
- Live Dealer Studios
- Multi-factor authentication and other security features
The 20% tax can generate hundreds of millions in revenue for Indiana. A recent study by iDEA Growth (iDevelopment and Economic Association) found that even an 18% tax (the initial thought) would generate $500 million annually.
Gaming experts point out that Indiana is on the shortlist to expand gambling. However, VGT owners have proven to be one major source of opposition to the online casino effort in Illinois. If HB 1548 were to pass this year but not HB 1536, it could hurt the chances of Indiana passing an online casino bill in the future.