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Overview: Online Sports Betting In Indiana

Overview: Online Sports Betting in Indiana

Indiana’s sports betting industry has grown quickly, processing $436 million in wagers in its first four months. That’s a staggering level of growth in a short amount of time. There are a few likely reasons:

  • Indiana didn’t have this type of gambling available before.
  • Illinois residents commuted to place sports wagers in Indiana before Illinois legalized sports betting.
  • Mobile and online sports betting were available from the beginning.

Mobile sports betting has been one of the most important pieces of competitive and successful sports betting industries. However, Indiana almost chose to launch sports betting without online betting options.

Why Online Sports Betting Was So Important For Indiana

Online sports betting was a hot topic well before any bills were introduced in the Indiana House of Representatives. In October 2018, Eilers & Krejcik submitted their final report on sports betting to the Indiana Gaming Commission. They predicted that 57% of sports wagers would be online in the industry’s first year. (68% of wagers were made online in Indiana’s first four months of sports betting.) They also projected a $154 million difference between a five-year-old sports betting market with and without mobile sports betting.

The analysis was clear. Legalizing mobile sports betting would be one of the most consequential decisions for Indiana.

Indiana’s Early Opposition to Sports Betting

Early versions of Indiana’s sports betting bill prohibited mobile sports betting. One prominent critic, Republican Representative Ben Smaltz, voiced concerns about minors betting from their phones. That’s a trend that we’re still waiting to see materialize.

But other critics worried about the popularity of online sports betting leading to online casinos. If bettors enjoyed mobile sports betting, casinos could take a hint and lobby to move casino games online.

That’s actually happened. State Senator Jon Ford introduced a bill in the Indiana Senate that would let casinos offer internet casino games and online poker. One of the reasons given by analysts was the success of mobile sports betting in Indiana. In this case, mobile sports betting did lead to interest in online casino gaming. But if online casinos have the same controls that keep minors out of sportsbooks, online casinos could enjoy the success that online sportsbooks have.

Mobile Sports Betting Proponents vs. Ben Smaltz

Ben Smaltz was the head of the House Public Policy committee. Despite mobile sports betting’s support in the House, he struck the language allowing mobile sports betting from the bill. He thought sports betting would be a retail-only industry all the way up to the vote.

But the Legislature had other plans. The bill’s sponsor, Mark Messner, argued successfully in favor of the revenue Indiana could generate from mobile sports betting. Even though Representative Smaltz removed mobile sports betting from the bill, legislators put it back in. It was part of a deal that included two new casinos and other gaming measures. On April 29, 2019, the House and Senate voted to pass the gaming bill with mobile sports betting. The Governor signed the bill into law on May 8th, bringing sports betting to Indiana.

How Much Money Does Indiana Sports Betting Make?

In 2020, Indiana bettors wagered $1.8 billion on sports. That’s a big year for an industry that had only been live since September 1, 2019. In December 2020, Indiana bettors wagered $313 million. It was a strong finish to a year of strong month-on-month growth. Indiana made $9.6 million from December 2019 to December 2020, almost doubling the Eilers & Krejcik prediction.

Although sports betting is doing well, the resulting tax revenue may not have that big of an impact. Indiana taxes sportsbooks’ gross revenues at 9.5%. That means that once sportsbooks pay their winners, sportsbooks have to pay state taxes. Most of that money is sent to Indiana’s State General Fund. That fund is projected to be just under $17 billion in 2021. A few million dollars doesn’t make much of a dent in that budget.

However, 3.33% of sports betting taxes fund the Addiction Services Fund. Of that 3.33%, 25% goes to problem gambling services, including education and prevention. That’s a lot of percentages at once. But the gist is that tiny slices of tax money are going to gambling addiction. Most sports betting taxes are getting dropped in the general fund, where they will gently pad the state budget. We’ll have to see whether sports betting taxes make a larger difference in the budget as the industry grows.

Indiana Online Sports Betting

Indiana is the star sports betting state that was almost exceedingly average. Early debates about mobile sports betting shaped Indiana’s competitiveness in the sports betting market. Since Indiana sports betting launched, it has surpassed revenue projections. Sports betting tax revenue may not make a big difference in Indiana’s budget. The economic benefits will likely be noticed in any jobs created rather than the small contribution to the state’s general fund. Anyone who wants to get in on Indiana’s sports betting action can read our Gambling 101 guides to get started. Notre Dame is having a great year, and now’s a good time to jump on board.

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