Government Forecast Raises Revenue 32% To $812 Million For Indiana Online Casinos

The state’s expectations for the future of online casinos in Indiana are being raised by a new financial impact statement.

Online casinos in Indiana are not yet legal, but a bill in the state’s House of Representatives aims to amend this. Forecasts from a recent financial report are predicated on the existing version of this bill.

Forecasts for Indiana online casino revenue rise.

The potential for online casinos in Indiana is enormous, with the industry expected to generate annual revenue worth hundreds of millions of dollars.

As a result, fiscal notes are required for the bill to forecast how the legislation will alter Indiana’s revenue. Internet casinos could impact several different tax funds in the state, indicating that this initial fiscal note might not be the final one.

The report was compiled by the state’s Office of Fiscal and Management Analysis.

Projections suggest that a fully developed online casino industry in Indiana could generate as much as $812 million in annual revenue. The report anticipates that it will take three years for Indiana to achieve this level of maturity in the industry.

Play Indiana forecasts that online casinos could generate almost $1 billion in yearly revenue, which is higher than some other estimates. For instance, Spectrum Gaming Group conducted a study that projected the maximum revenue to be approximately $836 million.

The report, however, forecasts a significant rise in annual revenue to $812 million, up from last year’s online casino bill. Last year’s bill for fiscal 2022 projected the industry’s annual revenue to be $616 million, indicating a 32% increase this time.

The structure of the two bills only really differs in their tax rates. The 2022 bill aimed to levy an 18% tax on online casino revenue, whereas the new bill has raised this to 20%.

This implies that Indiana’s analysts are more positive about the potential of online casino gaming in general as they believe that a 2% difference won’t be enough to bridge the nearly $200 million projected gap between the two bills.

However, the report forecasts that online revenue will have associated costs.

Forecasting cannibalization for casinos in Indiana

The fiscal note of the bill forecasts that online casinos in Indiana may ‘cannibalize’ or take away business from traditional land-based casinos to a certain extent. This means that the report implies there could be a reduction in the in-person casino industry due to the rise of online gaming.

Some gambling activities that take place at physical casinos will be replaced by online casino games. Research has found that roughly 30% of new revenues from online gaming come at the expense of existing casino revenues. This percentage could potentially be even higher in a saturated market such as Indiana.

The forecast deviates from the experiences of other states that have already established online casinos. For instance, Michigan has successfully expanded both its online and physical casinos simultaneously. This is primarily due to the fact that the two aspects of the industry offer different products.

Retail casinos may not be as convenient as online ones, but they don’t necessarily have to compete on that front.

Going to a physical casino involves more than just engaging in the games on site. It frequently serves as a socializing mechanism. Additional facilities such as bars, restaurants, entertainment venues and other amenities provide an advantage to brick-and-mortar casinos over online ones.

Even though the forms of gambling are alike, the experiences they offer vary greatly. This difference aids in the simultaneous growth of online casinos and the retail industry, rather than causing the former to overtake the latter.

The report from Spectrum Gaming differs from the fiscal note.

The Spectrum Gaming Group study, which forecasted the potential revenue for Indiana online casinos, also explored the probability of cannibalization.

This study does not anticipate any cannibalization from Indiana online casinos, which contradicts this new report.

The evidence from states that have implemented iGaming suggests minimal or no impact on the revenues of existing casinos. This is especially true in states where traditional, in-person gaming is readily available to the majority of residents, as seen in Delaware and West Virginia. Therefore, Spectrum predicts that introducing iGaming in Indiana will likely have a negligible effect on the state’s retail casino gaming revenues, as observed in other states with iGaming.

Earlier this year, the Indiana Gaming Commission commissioned a report from Spectrum.

Online Hoosier Lottery sales reach half a billion dollars

The latest report’s third puzzle piece involves online lottery tickets. The online casino bill in Indiana would also legalize internet lottery games.

The financial projection expects significant success in the online aspect of the business.

The report forecasts that by the third year, Hoosiers may be buying online tickets worth up to $548 million annually. Based on these projections, this could yield approximately $82 million in new profits each year.

The Hoosier Lottery generated profits exceeding $340 million in the last fiscal year, therefore, an additional $82 million represents a substantial increase.

Nonetheless, it’s crucial to bear in mind that nothing is definitively confirmed. Similar to the online casino forecasts in the report, the online lottery projections are not solid pledges.

The online casino bill in Indiana still has a considerable journey before it is enacted into law. During this period, numerous changes could occur that could potentially overturn any forecasts.