Although Indiana online casinos aren’t legal yet, that’s not stopping lawmakers from crunching the numbers.
According to a new financial impact study, a mature online casino industry could generate upwards of $812 million in revenue annually.
Indiana lawmakers staying conservative on the online casino market
The Office of Fiscal and Management Analysis study also says it would take Indiana three years to reach full maturity. The $812 million is a bit conservative, considering a similar study by Spectrum Gaming Group. The Spectrum study estimated the revenue ceiling to be around $836 million.
Regardless, the fiscal note attached to a new online casino bill is 32% higher than in 2022. The difference between the failed bill in 2022 and this year’s bill is their tax rates. Legislation in 2022 would have taxed online casino revenue at 18%.
The 2023 bill will increase the tax rate to 20%.
What about the cannibalization of retail casino business?
One hurdle lawmakers in favor of Indiana online casinos will have to overcome is the concept behind cannibalization. The bill’s fiscal note suggests online casinos would take away from the brick-and-mortar business.
As stated in the Fiscal Impact Statement:
“Online casino games will displace some gambling activities occurring at brick-and-mortar casinos. Studies have concluded that up to 30% of new online gaming revenues are displaced from existing casino revenues. This figure could be higher for a saturated market like Indiana.”
However, the prediction differs from what other justifications with legal online casinos have experienced. In Michigan, both online and retail casinos have been able to co-exist. Online casinos offer convenience, while retail properties rely heavily on the experience and ancillary benefits.
The Spectrum Gaming Group study that predicted $836 million in revenue also said it doesn’t expect any cannibalization from online casinos. “Based on the evidence from the states where iGaming has been introduced, there is little, if any, cannibalization of revenue from established casinos.
This is particularly true in states where in-person gaming options are easily accessible to most of the population, such as in Delaware and West Virginia. 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.”
Spectrum’s report was commissioned by the Indiana Gaming Commission earlier this year.
