30-second summary

• Indiana has widespread support for legal sports betting
  
• Senator Ford’s bill would see sportsbooks open by January 1, 2020
• He is proposing a tax rate on par with Nevada
• Indiana currently has 14 casinos and 2 racinos in operation

The gambling landscape in Indiana

Casinos represent a substantial amount of business in Indiana, which has 14 facilities currently in operation. These riverboat casinos have been around since 1993, and in 2015 they were given the green light to move their operations onto land if they had the desire to do so.

The state lottery has been operating since 1988. Two racetracks still operate in Indiana, at Hoosier Park and Indiana Downs. Since 2007, they have been permitted to have slot machines and video lottery terminals on their premises.

So-called racinos are a trend across the US. Horse and dog racing have both struggled to drum up revenues. Racinos enable them to keep operating without making a loss.

Sports betting legalization efforts to date

There is plenty of interest in legalizing sports betting in Indiana. While the benefits of legalization are obvious, lawmakers sought an independent study on what the effects of legalization would be.

Eilers and Krejcik conducted the study. The firm concluded that legalization was a good idea and that Indiana should enact legislation sooner rather than later. The report says state officials need to move fast before the black market can embed itself too deeply. It also advised on legalizing mobile betting and setting fair taxes.

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

Some parties in government were in favor of a sports betting integrity fee. A slice of every sports bet would go towards the major sports leagues, but the idea is not very popular as it would cut off too much margin for operators.

Potential issues

While there is widespread support for legal sports betting, there is still opposition.

There is also fierce debate as to where sportsbooks will be located. Some want sports betting only at facilities currently in operation, including the racinos and casinos in the state. Others want to open up licenses to out-of-state operators.

Currently, you can play the lottery or place a wager on horse races from the age of 18. However, to gamble at a casino you need to be 21 years old. Senator Jon Ford, who drew up draft bill SB 439, wants the minimum age to place a sports bet to be 21 years old.

There is a feeling despite these drawbacks that legal sports betting is very close in Indiana.

Senator Ford 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.”

The Eilers and Krejcik report estimates a tax revenue figure each year of $87m from the fifth year of sports betting onwards.

Draft bill HB 1363

A companion bill to SB 439 from Senator Jon Ford has reached the state legislature. Representative Alan Morrison’s HB 1363 bill has now been referred to the state’s Committee on Public Policy.

The bill proposes a country-low tax rate of 6.25% on the gross sports betting revenues at the physical sportsbooks. There was no indication or differentiation made for online sports betting tax rates. Ford had been looking at a 6.75% tax rate – the same level as in Nevada.

Both bills aim to legalize mobile sports betting. The only real difference between the two bills is that with Ford’s bill, a bettor would have to register in person before opening up a mobile betting account.

Adoption timeline

If the bills gain traction, there will be a quick timeline of adoption. The legislation would have a start date of July 1. The application process for obtaining licenses would begin in October 2019, with the first sportsbooks open by January 1, 2020.

The license application fee would be set at $75,000 application fee, with a yearly $10,000 administrative fee in place.

Despite Morrison including a provision for integrity fees in his previous bill of 2018, there is no mention of them in HB 1363.

The bill has a fiscal note attached that has a wide estimate for 2021 tax revenues, ranging from $2.2m to $13.3m. Most of this tax revenue will go into the state coffers. Each year, $100,000 would be given to the Division of Mental Health and Addictions’ Sports Wagering Fund.