Indiana Legislators To Move Ahead With Sport Betting Bill
Indiana could reap $87 million in new tax revenue from regulated sports betting in the first five years, according to a study released Friday.
But the report cautions that mobile sports betting is key to making the venture profitable in the state.
The Indiana Gaming Commission in July hired a firm with gambling expertise to study sports wagering as state policymakers consider legalizing the activity. That report was made public for the first time Friday at a legislative hearing on the topic.
Lawmakers will ultimately decide in the 2019 session whether to legalize sports betting.
The U.S. Supreme Court cleared the way this year when it struck down a federal law that banned commercial sports betting in all but four states. Under that law, Nevada was the only state allowed to take single-game sports bets.
Overall, in the first five years, regulated sports betting will produce nearly $1.7 billion in direct and indirect economic impacts for Indiana, the study said.
The analysis estimates that 14 million Americans bet between $50 billion and $60 billion each year via illegal channels, resulting in a market worth between $2.5 billion and $3 billion in annual revenue.
Since the court decision, states have begun to roll out legal, regulated sports betting operations. So far, seven states were live or expected to go live shortly.
The study focused on two scenarios – the first included retail and mobile wagering while the second was retail only. This is the difference between betting in person at a casino or other commercial property and making bets from your phone or laptop.
“Critically, we believe that mobile sports betting represents more than half of the total revenue potential of the Indiana market. We further believe that a market limited to retail wagering would decline after year three thanks to increasing consumer preference for mobile betting,” the report said.
The 142-page study by Eilers & Krejcik Gaming cost the state about $75,000. It laid out policy considerations – from who would be eligible to offer sports betting to what games or types of bets would be allowed. And there is the question of whether professional sports leagues should be paid an “integrity” fee.
Retail outlets could be casinos, lottery retailers or sports venues, for example. Some states have prohibited bets on college and high school athletics while others haven’t. Professional leagues have also expressed opposition to in-play bets, such as will the next pitch be a ball or strike?
Using both retail and mobile bets, Indiana could generate $225 million in total annual revenue at maturity during the third full year of operations. “Revenue” means the total amount wagered by customers less total amounts paid out to winning customers.
The study estimates that Indiana’s neighboring states are far more likely than not to authorize sports betting. This could impact Indiana’s existing casinos negatively.
In the report, operator licensure would be limited to the state’s 13 commercial casinos, who would pay an initial $75,000 licensing fee and annual $5,000 administrative fee. Sports betting gross gambling revenue would be taxed at a flat rate of 9.25 percent.
The study projected 729 full-time equivalent jobs by year five. That is roughly equal to 56 gambling and non-gambling support jobs per casino. But as gambling migrates from in-person retail to mobile that number will drop.
Base tax revenue would start out slow – about $5 million a year – but then grow to about $23.7 million annually.
Legislators shouldn’t rely too much on the report, though, because it even admits that regulated sports betting in the U.S. is uncharted territory.
“Predicting performance in any new market is always a speculative exercise, but predicting performance for regulated sports betting is even more so thanks to the virtual lack of useful precedent,” it said.
The active sports bettor in Indiana is predominantly male, white, in their mid-40s, married or living with a partner, and many have children living at home. Most are employed, and many also have a college degree.
About 53 percent of those surveyed in the report said they would be more likely to place more bets than they currently do if sports betting were legalized at Indiana’s casinos and horse tracks. About 40 percent said their betting would remain about the same.