Indiana Collected $1 Billion In Gambling Taxes During The Past Year

For the first time in ten years, The Hoosier State saw its gambling-related tax revenue surpass $1 billion in one year.

Taking into account all legal gambling, Indiana amassed $1.04 billion from July 2021 to June 30, 2022. This marks an 8% rise from the $958.3 million collected in the 2021 fiscal year.

The upswing was largely due to the increase in Indiana casino tax receipts.

Growth was driven by the end of casino restrictions.

The Indiana Gaming Commission declared that casino winnings worth $2.5 billion led to a tax collection of $660.2 million for Indiana over a 12-month period. This represented an increase of about $100 million, or 17.9%, compared to the revenue from the previous budget year.

The growth of casinos and racinos was moderate at 13%.

The increase in tax revenue is primarily due to land-based venues operating without COVID-19 restrictions. This, coupled with the opening of the new Hard Rock Casino in Gary, has contributed to around 26% growth in northern Indiana.

Greg Small, the Executive Director of the Indiana Gaming Commission, stated that a significant number of gamblers have returned to casinos following the lifting of pandemic restrictions.

The gaming industry, despite facing setbacks due to the pandemic in FY 2021, made a strong comeback in FY 2022. The industry set new national revenue records and Indiana casinos recorded substantial yearly growth, leading to an increase in Indiana’s tax revenues.

Revenue could be further boosted by Indiana online casinos.

Currently, Indiana provides online sports betting, and there is a possibility that online casino gaming may be introduced soon. This potential expansion could significantly increase the state’s tax revenue in the future.

In February, the Indiana Gaming Commission hired Spectrum Gaming Group to carry out a study on the viability of online casino gaming in Indiana. The results of the study could influence legislative actions in 2023.

Spectrum used three approaches to estimate the revenue of Indiana iGaming over its initial three years, drawing from the results of other states with online casinos:

• Estimated spend per adult
• Expenditure as a percentage of gross state product
• Percentage of personal disposable income spent

In the study, Spectrum stated that they had estimated the potential gaming-tax earnings that could be generated from prospective iGaming. They did this by applying three hypothetical flat tax rates of 20%, 30%, and 45%.

Spectrum found out that online casino operations have few direct employees and minimal capital investment in buildings. Consequently, promoting participation could be achieved by offering lower tax rates on iGaming compared to land-based gaming.

Projected Igaming Revenue and Gaming Tax Receipts

Data from six states with iGaming – Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, and West Virginia – suggest that introducing iGaming in Indiana would not adversely affect the state’s casino revenues.

Currently, online casinos are legal in seven states across the US. Nevada, however, offers only internet poker. Michigan, New Jersey, and Pennsylvania, known as the “big three iGaming states,” each generate over $1 billion in gross gaming revenue every year.

Six Igaming States

The extensive and solid commercial gaming industries of the big three also serve as a window into the potential of Indiana’s online casino.

There are 13 commercial casinos in Indiana, generating over $2.7 billion in gambling profits annually. A study suggests that, subject to the tax rate, online casino gambling could potentially contribute $940 million in tax revenue over a span of three years.

In addition to the over $1 billion that Indiana is already generating without iGaming, that’s also included.

The addition of new gambling facilities contributes to the heap.

Sports betting contributed an additional $31.2 million in revenue for the 2022 budget year. Last year, Hoosiers placed over $4.5 billion in sports bets.

However, following casinos, the Hoosier Lottery made the second largest tax revenue contribution of $344.4 million. Lastly, minor taxes from charity gaming activities and horse racing contributed an additional $2 million.

In summary, the state’s total revenue exceeded $1 billion for the first time since the 2012 fiscal year. It is important to note that during this period, the increased casino taxes contributed more than $800 million annually.

Small highlighted that the robustness of Indiana’s gaming industry became evident when Caesars chose to invest a whopping $73.7 million in projects at the state’s two racinos located in Shelbyville and Anderson.

Earlier this year, Horseshoe Indianapolis completed its refurbishment, costing $33.7 million. The renovation expanded the facility’s gaming floor by 25,000 square feet.

Harrah's Hoosier Park in Anderson is currently undergoing a $40 million expansion. The project is expected to be completed by July of next year.

Churchill Downs is constructing a new $110 million casino in Vigo County. Meanwhile, Queen of Terre Haute is set to commence business late next year.

The introduction of a new casino and the expansion of existing facilities should stimulate growth in Indiana’s numbers in the upcoming years. If the state incorporates online casinos soon, it could become more common for Indiana to generate $1 billion per year in the near future.