Potentially Lucrative Sports Betting Revenues for Indiana

A new report on the consequences of legalizing sports betting in Indiana shows that the state could eventually stand to make over $87m in tax revenue each year from it.

The authorities in the state are actively looking at the issue and a number of lawmakers want to prepare to introduce it in the upcoming 2019 legislative session.

One of the main goals is to curtail the significant black market for sports betting that currently exists in the state. While significant progress has been on a sports betting bill recently, there is still much to discuss.

History of Indiana gambling

Casinos are big business in Indiana, with 14 establishments currently in operation. Traditionally, these have been in the form of riverboat casinos, which have been legal since 1993.

These casinos were only given approval in 2015 to open up facilities on land. The state lottery also only began in 1988 and the racetracks in the state – Indiana Downs and Hoosier Park – were given the green light to offer slots to their customers in 2007.

Horse and dog racing across the United States has been struggling since the turn of the century. Therefore, a lot of racinos are in operation, with the revenue from slot machines and video lottery terminals helping them to sustain their operations. Now the state is looking at legalizing sports betting.

Status of sports betting to date

Many people in Indiana are in support of legalization of sports betting because of its many potential benefits. One of the first ports of call for the lawmakers was to commission a study on the possible effects of legalization.

The study was done by Las Vegas consulting firm, Eilers and Krejcik. The report’s findings say that legalization would be a good idea for Indiana and recommends that this should be done as soon as possible.

Otherwise, the black market would be able to dig in its heels and resist future changes. The consultants also want legal mobile betting to be allowed and not to implement hefty tax rates.

The report says: “On balance, we believe the risks associated with delaying sports betting beyond the 2019 (legislative) session clearly outweigh the rewards.”

So far, there have been calls for a tax rate of about 9.25% for sports betting revenues, which would be a competitive rate. Some parties are pushing for the introduction of an integrity fee.

This would see a cut of every sports bet go towards the league that is the basis for a given game that is being bet on. However, no state to date has made such an inclusion in the final version of a sports betting bill. It would cut off too much of the margin from the operators of the sportsbooks and would not be conducive to a good environment.

Hurdles in the way

Just like in most states, there are those who oppose legalization, while bodies such as the Indiana Gaming Commission and the Interim Study Committee for Public Policy in the state are in favor of this move. However, one of the main issues revolves around the minimum age for placing sports bets.

To gamble in one of the casinos in Indiana, you need to be 21 years old. However, if you want to buy a ticket for the lottery or place a horse racing wager you only need to be 18 years old.

The Indiana Senator Jon Ford wants the minimum age to place a sports bet to be 21 years old also, which the casinos in the state are in support of. There is also the issue of where you can make these sports bets.

The Casino Association in the state only wants sportsbooks at those facilities that currently already have a casino or racino license. However, there are many other parties that would be greatly interested in starting a sports betting offering in the state if possible.

Recent progress

Senator Ford recently spoke on the topic of legal sports betting in Indiana and believes that the legislature is very close on the issue.

Talking about their aims, he said: “Try to bring some of the black market betting we know is going on. They say it’s about a $300m illegal sports betting market here in Indiana. Bring that into a regulated industry, so we can take some of that element off the street.”

He also believes that legalization will help their state casinos to stay competitive with nearby states. He added they are going to allow bets on the Indiana Colts and Pacers, as well as on college sports.

Estimates point towards that by the fifth year of legal sports betting, annual revenue would be in the region of $256m, with the state receiving about $87m of this amount.

Ford is working on his own version of the bill, while Representative Alan Morrison is drafting his own version. They are working together on the matter and are both hopeful that legal sports betting will be in Indiana come summer 2019.