Credit: Dreamstime/Sean Pavone
An online gambling bill is back on the table in Indiana, and this time it includes online poker.
Sen. Jon Ford first drafted legislation to bring online casinos to Indiana in October 2020. Ford did not include online poker in the bill’s initial draft, believing it might hurt its chances. But after discussions with fellow lawmakers and industry representatives, he saw fit to add online poker before introducing the 2021 version to the Senate.
“They didn’t think it would be as big an issue as I thought it would be,” Ford told Play Indiana this week, though he added that he could remove online poker later if circumstances changed.
Ford hopes his bill gets a Senate Public Policy Committee hearing soon. There may well be additional reasons to encourage Ford going forward. The most obvious one is the remarkable success of sports betting in Indiana during its first full year in 2020.
Bill to allow three online skins per operator, 18% tax
Ford’s bill, S 417, contains much that is similar to the draft version he first put forward three months ago. The significant financial struggles of the state’s casinos and racinos during the past year due to the COVID-19 pandemic inspired the legislation which Ford hopes will provide the industry a needed boost.
Among its details, the bill would:
- Authorize the state’s 14 casinos and racinos (including the yet-to-open Rocksino in Terre Haute) to offer online casino games including online poker,
- Allow each property to partner with up to three online brands or skins,
- Require operators to pay an initial license fee of $100,000, plus $25,000 each year for the annual renewal,
- Establish a tax rate of 18% on internet gaming revenue, with 3% going to local municipalities, and
- Set aside 3.3% of the tax revenue for a fund to provide gambling addiction services.
The bill also enlists the Indiana Gaming Commission to regulate online gambling in the state.
The commission recently released its annual report for 2020. Following the spring closures and ending the year operating at 50% capacity, the state-wide total win (adjusted gross revenue) for casinos in 2020 declined a staggering 72.9% year-over-year.
However Ford believes his bill would benefit more than just the state’s casinos and racinos. According to Ford, the state as a whole stands to benefit as well.
“We’re estimating between $65 to $80 million in annual tax revenue, so that certainly helps the argument,” said Ford.
That estimate is a significant increase over the $45-60 million in annual revenue Ford was describing back in October. Such projections would certainly not be met initially, perhaps not for several years depending on how quickly the market matures.
Then again, if Indiana sports betting is any indication, online casino and poker could prove to be a breakout success.
Sports betting success further opens door to online casino, poker
Ford’s proposed bill arrives just as Indiana concludes a spectacular first full year of legal sports betting.
The state legalized sports betting in May 2019. The first bets were placed in September 2019, with online sports wagering arriving a month later.
After a strong start to 2020, the state’s sportsbooks experienced a decline from March through June while many sports were sidelined. But with the return of all professional leagues and especially football season, Indiana set records each of the last four months of the year.
In the end, Hoosiers wagered more than $1.7 billion on sports in 2020. Barely a year in, Indiana has become one of the biggest sports betting markets in the country. Currently only Nevada, New Jersey, and Pennsylvania exceed Indiana each month in terms of sports betting handle.
With a state tax rate of 9.5% on sports betting in Indiana, that translated to just over $13 million in state tax revenue. As noted, Ford’s bill would introduce a tax rate of 18% on online gambling, nearly twice that of sports betting.
“Everyone’s pleasantly surprised with the success of sports wagering,” observed Ford. “A great percentage of revenue from sports wagering has come from online, so I think it pretty clearly shows the younger generation in Indiana really wants mobile gaming.”
Ford is right about the majority of sports betting happening online. Since launching, about 78% of all sports bets in Indiana have been placed online.
Four months for Ford’s bill to move forward
Ford has introduced S 417 at the very start of the new legislative session, which will last through April 29. With other pressing issues caused by the pandemic and associated economic pressures, Ford knows lawmakers will already have much else to contend with over the coming months.
That said, the pandemic has also increased the need to find new revenue sources to help with the economic recovery. Put together with the state’s sports betting success and broader societal shifts toward moving business online, circumstances appear favorable for Ford’s legislation to move ahead.
Whether or not online poker stays in the bill going forward remains to be seen. Even if poker stays in and the bill becomes law, casinos may opt not to explore opening online poker rooms in favor of sticking with online casino, at least initially.
Even so, online poker at least has a seat at the legislative table.