Indiana has edged closer to legalizing online casinos and digital lottery, with House Bill 1432 passing through the House Public Policy Committee by a 9-2 vote.
Despite HB 1432 gliding over the first hurdle, sterner challenges lie ahead. The Bill will now move to the House Ways and Means Committee, where the House will further discuss financial implications. Should it pass through the House, it will face staunch opposition in the Senate, which is traditionally against gambling expansion.
Additionally, the new Governor of Indiana Mike Braun’s stance on broadening gambling law is unknown.
Key Provisions of HB 1432
The bill, sponsored by Rep. Ethan Manning, proposes the following:
- Online Casino Licensing & Operations: Indiana’s casinos and racetracks could apply for an online gaming license for $500,000, providing each retail location with the potential for three online skins.
- Progressive Tax Structure: Operators would initially be taxed at 26% of adjusted gross revenue, shifting to a tiered structure ranging from 22% to 30% starting in July 2026.
- Digital Lottery Sales: The Indiana Lottery Commission would be authorized to sell draw and eInstant games online.
- Responsible Gambling Initiatives: The bill mandates the creation of the Indiana Responsible Gambling and Problem Gambling Services Program.
- Increased Sports Betting Tax: A key amendment to HB 1432 raises the online sports betting tax rate from 9.5% to 20%, while retail sportsbook operations maintain the current 9.5% rate.
- Tribal Gaming Inclusion: The Pokagon Band of Potawatomi Indians, which operates a casino in South Bend, would be permitted to participate in online gaming under a state license.
The potential expansion of online gambling legislation proposed in HB 1432 has thus far caused a mixed reaction. The reported proposals would generate the state over $300 million in revenue. Furthermore, the often cited benefits of reducing illegal gambling with operators based offshore have also been made in Indiana.
Churchill Downs and Penn Entertainment are among operators arguing that online gaming could divert revenue away from land-based casinos. Ironically, both operators already operate online sports betting or other gaming across the United States. Further, other economic impact studies have suggested that the cannibalization threat is nearly non-existent.
A further complication comes from HB 1433, which seeks to legalize electronic pull tabs in local bars. Mid-tier operators have voiced concerns against electronic pull-tab games, which studies suggest could generate $20,000 to $30,000 in revenue for small businesses in Indiana.
The coming weeks will be critical in determining whether Indiana joins the growing list of states embracing regulated iGaming.
