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If it was up to Spectrum Gaming Group, online gambling in Indiana would launch today.
The Indiana Gaming Commission hired Spectrum to analyze the impact of iGaming on Indiana’s commercial casino market, as a prospective online casino launch can stoke fears of retail casinos losing money to their digital counterpart.
Spectrum’s conclusion after finishing its analysis? Rest easy, Hoosier State casinos; online casinos may slow the growth of retail casinos, but it won’t hurt them.
Spectrum conducted a similar study in 2022. Indiana gaming regulators requested a second study to account for changes in the online gambling industry.
Study finds few downsides to launching online casinos in Indiana
Spectrum’s report focused on the impact iGaming would have on four key gaming industries:
- Retail casinos
- Digital sports betting
- The lottery
- Horse racing
The firm analyzed the online gambling industries in Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, and West Virginia to get a sense of how online casinos would affect Indiana.
Spectrum noted in its report:
“Based on our analysis of iGaming in other states, iGaming does not appear to have a negative effect on other forms of gaming. That said, the iGaming results to date in other iGaming states suggest that it is possible that iGaming may be limiting the ordinary growth of retail casino revenues.”
Impact on retail casinos
The big worry about launching online casinos is that they will pull revenue away from retail casinos, a phenomenon known as “cannibalizing.”
Spectrum found that retail casinos in Delaware, New Jersey, Pennsylvania, and West Virginia saw their revenue increase in 2023 compared to 2019. Michigan and Connecticut’s retail casino revenue dropped.
Spectrum found that casinos in the six states with real-money online casinos saw a combined revenue growth of 0.7%. Despite the ambivalent results, Spectrum believed that iGaming wouldn’t cannibalize Indiana’s retail casinos.
That’s because the Indiana market most resembles states that saw retail revenue growth amid online casino launches.
“Based on the results in other iGaming states, Spectrum believes implementing iGaming in Indiana will have little impact on retail casino gaming revenues in the state,” the report concluded.
Sports betting
Because operators that offer sports betting and online casinos in a given state often combine the two platforms into one app, creating “revenue synergies,” Spectrum found.
It noted that two national digital gaming operators found that bettors who use online casinos and sportsbooks bet more than those who use one or the other. Long story short—Indiana sports betting won’t suffer from an online casino launch. It could benefit.
Spectrum noted:
“Based on the results in other states, Spectrum believes that the introduction of iGaming would have no negative impact on sports betting. If anything, iGaming would help to increase sports betting revenues, as both activities are typically offered on the same mobile app, thus promoting crossover play between the two types of gaming.”
Lottery and horse racing
Like retail casinos and sports betting, Spectrum’s research led it to believe that the introduction of online casinos would not hurt the Hoosier Lottery or Indiana horse racing.
Online casino revenue could hit $2 billion after three years
Using three different revenue models, Spectrum’s analysis found that the expected revenue for Indiana online casinos would grow from $489 million in year one to $696 million in year two. And by year three it would again grow to $880 million.
In total, the firm believed that Indian online casinos could generate $2.1 billion in revenue in its first three years.
The state’s projected year-three revenue would put it behind the big three iGaming states: Michigan, New Jersey, and Pennsylvania.
Three-year tax revenue could be as high as $1 billion
Spectrum’s revenue analysis included projections for how much tax revenue the state could generate from online casinos.
- At a 20% tax rate, revenue would be around $413M after three years.
- At 30%, that revenue would climb to $619 million.
- A 45% tax rate would generate nearly $1 billion in revenue.
When will Indiana online casinos be legal?
Spectrum’s Prospective Internet Casino Gaming In Indiana report is a win for iGaming proponents in the state. It’s the second such report in the past two years, and it should be convincing enough to allay any fears the retail casino industry has.
That being said, Indiana lawmakers won’t consider legalizing online gambling until 2025. Part of their apprehension lies in a 2019 scandal in which a gaming operator was charged with making illegal campaign contributions to push through legislation that would benefit the operator.
