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Shortly after the U.S. Supreme Court in 2018 struck down a federal law that banned commercial sports betting in most states, Indiana was among the first group of a dozen or so states to legalize it.
Being an early adopter in the Midwest allowed Indiana to easily blow past projections for sports wagers and tax revenue, drawing a new generation of bettors who can easily place wagers on their smartphones as well as at Indiana casinos.
Early projections estimated sports betting in Indiana would generate $12 million in revenue a year by taxing sportsbook operators’ earnings at 9.5%.
In the four years since sports betting was authorized by the Indiana General Assembly in 2019, it has generated a total of more than $100 million in tax revenue from sportsbook operators’ earnings on more than $12 billion in wagers, according to industry analyst PlayIndiana.
“It’s hard to imagine the Hoosier state being disappointed with its sports betting figures so far,” said Danny Cross, who writes about sports betting and casino gambling for PlayIndiana. “Being the only game in town allowed Indiana to punch above its weight a little bit.”
But the flow of wagers in Indiana is starting to slow, because more neighboring states are taking up sports betting.
Illinois and Michigan were close on Indiana’s heels, starting sports gambling in March 2020. But two more years passed before Ohioans could place legal sports bets. That took effect this Jan. 1, and Kentucky is slated to follow in September, which could impact sportsbooks near Indiana’s southern border.
Last year, Indiana sports betting peaked at $4.4 billion worth of bets, but Hoosier sports wagers slowed in the first half of 2023 when Ohio joined the fray. For instance, in June, sports betting in Indiana was 13% lower than the $256 million registered in June 2022.
Indiana casinos—which previously attracted many Ohioans to place sports bets and are facing new casino competition in Danville, Illinois, and soon in Chicago—are seeing an overall slowdown this year after a strong 2022 fiscal year that generated the most casino tax revenue in nearly a decade.
Still, $4 billion in sports wagers is expected to be placed in Indiana this year, according to analysis by PlayIndiana.
One reason for the resilience is the state’s love of basketball.
Fiscal experts initially underestimated revenue projections for Indiana, because football dominated sports betting in most other locales, said Jennifer Reske, deputy director of the Indiana Gaming Commission.
“We were told it would be a cyclical regulatory environment, with most of the activity on football,” Reske said. “Indiana broke the mold when it came to that.”
Indiana’s early entry into the market also is expected to help it continue to reap strong returns.
“We have seen a reduction, but at the same time, our operators are being innovative and were able to build a larger customer base early, and that’s a benefit to us,” Reske said.
Gambling problem?
The ease and accessibility of sports gambling is a big reason for its proliferation, especially among younger people.
Nine out of 10 Hoosier adults gambled last year, according to a new survey from Prevention Insights, a center housed within the Indiana University School of Public Health.
Three percent of Hoosiers reported having a problem with gambling, but only 0.6% sought treatment. Nearly 40% of respondents hadn’t heard of the Indiana Problem Gambling Referral Line.
The hotline received 604 calls in 2022, nearly twice the 320 recorded in the previous year, according to the Indiana Council on Problem Gambling, due in no small part to sports betting.
While people have bet on sports for years despite its being illegal, normalizing it attracted a new demographic, according to Christina Gray, the council’s executive director.
She said the demographic tends to skew younger because nine out of 10 bets are placed on a mobile device through apps such as DraftKings and FanDuel.
“It’s so easy. You can sit in a meeting and gamble, and nobody would know it,” Gray said.
In response, the National Council of Legislators from Gaming States created a framework for “responsible gaming standards” that can be adopted to help states address problem gambling.
The group recommends adequately funded and affordable measures for prevention, harm reduction, public awareness, intervention, treatment and research—all coordinated among policymakers, regulators, the gambling industry, community leaders and treatment providers.
NCLGS recommends that state gambling commission staff members address the problem, rather than delegating it to other state agencies.
In Indiana, 3% of gambling tax revenue is dedicated to addressing problem gambling.
It goes to the Family and Social Services Administration, which allocates it to counselors, treatment programs and not-for-profits.
Sen. Jon Ford, R-Terre Haute, who chairs the NCLGS, said taxpayers should see more detail about the spending.
“It’s kind of mysterious how much of that [3%] is getting spent on responsible gaming,” Ford said. “I would like to see more research in the state of Indiana.”
The NCLGS recommendations also call for stricter advertising guidelines to ensure that marketing targets only those who can legally gamble.
“We need to look at our advertising guidelines, the amount of money we spend on responsible gaming and where it’s going,” Ford said.
Gray said some of Indiana’s dedicated funds should go toward advertising the state’s helpline.
“If you’re going to legalize all this gambling, then put aside serious money to help those who have a problem with it,” she said.
The next frontier
Legal gambling first became possible in Indiana after Hoosiers voted in a 1988 referendum to lift the state’s constitutional ban on lotteries. That cleared the way for the establishment of the Hoosier Lottery and parimutuel betting at horse tracks.
In 1993, lawmakers authorized riverboat gambling on Lake Michigan, the Ohio River and Patoka Lake. A Patoka Lake facility never opened, but in 2003, legislators approved building a casino on a man-made lake in French Lick.
The next milestone came in 2007, when the state allowed slot machines at Indiana horse tracks, bringing casino gambling to central Indiana. In 2015, riverboat casinos were allowed to move onto land-based facilities on their existing sites.
Now, sports betting has quickly ingrained itself in pop culture in Indiana and elsewhere, with celebrities and pro athletes appearing in commercials for DraftKings and FanDuel, two industry titans.
The gambling industry also has its sights set on legalizing online casino gambling, otherwise known as iGaming, which allows anyone to wager on poker or other games via the internet.
Seven states already have legalized online casinos. Efforts to get Indiana to follow suit fell apart in this year’s legislative session. A bill authored by Rep. Ethan Manning, R-Logansport, would have allowed Hoosiers to play lottery and online casino games on their smartphones, tablets and desktop computers, but the legislation never got a hearing.
While the measure had some support in the House, Senate President Pro Tem Rod Bray, R-Martinsville, was less than enthused given that the sports betting industry is still relatively fresh.
When asked if he planned to try his hand at an online casino gambling bill again in the 2024 session, Manning said he is “continuing to have conversations” with lawmakers and stakeholders about it.
“The gaming industry has a tremendous impact on our state, including creating thousands of jobs, generating tax revenue and spurring economic development in our communities,” he said. “I anticipate iGaming will be discussed during the 2024 legislative session.”•
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At this point state officials need to understand how competitive states are to generate income for their respective states. Indiana can’t afford to lag behind on things as the state has custamerily done in the past. Neighboring states have caught up and possibly will surpass Indiana so the gloves has to come off. Indiana needs to build a major amusement park to challenge Ohio and bring a major Hotel casino Downtown Indy, as well as finally legalizing marijuana. Indiana has to stop letting states out do us and be leading on what’s trending in the nation. This is one of many reasons so many locals leave to other more progressive states. If nothing else, Indianapolis shouldn’t have any restraints as it’s the capital and largest city in the state. Indy should be set aside as the Mecca and destination for progressiveness in the state.
Gambling is evil. Reducing its growth should have been the point if legalization. We all knew it was about the money…