Indiana lawmakers not betting on state revenue windfall from legal sports wagering

That's a far cry from the more than $200 million that Democratic Illinois Gov. J.B. Pritzker is hoping to generate through licensing fees and a 20% sports wagering tax to help close a $3.2 billion deficit in Illinois' next budget.

The lower projections for Indiana are based on the smaller than anticipated sports wagering tax revenue collected in most of the six states that legalized sports wagering last year, after the U.S. Supreme Court struck down a 1992 law that effectively banned sports wagering outside of Nevada, according to LSA.

Sports wagering tax revenue, along with $100,000 initial and $50,000 renewal license fees, are due to be deposited in Indiana's general fund, whose $15.6 billion in annual revenue is used for elementary and high school education, colleges and universities, prisons, health care, state parks and nearly everything else state government does.

State Rep. Terri Austin, D-Anderson, said regardless of how much revenue Indiana gets from sports wagering, the real benefit for Hoosiers will come from getting rid of illegal sports gambling operations.

"Illegal sports betting is a $300 million industry in this state," Austin said. "There are minors who are engaged in sports betting. We need to try to halt that practice, and one of the best ways to do it is to create our own legal framework around sports betting."

An Eilers and Krejcik sports betting analysis prepared last year for the Indiana Gaming Commission concluded that a tax rate of less than 15% and the ability to place wagers on mobile devices — two policies embraced by Hoosier lawmakers — have the best chance of attracting legal sports betting operators to the state and capturing the largest possible share of the sports wagering black market.

Sara Tait, executive director of the Indiana Gaming Commission, said that doesn't mean her agency will let up in its efforts to eliminate illegal gambling at bars and other locations throughout the state.

"The extent to which legal sports betting will impact the black sports wagering market is unknown," Tait said. "The majority of our illegal gambling investigations are the result of tips and we will continue to work with local prosecutors, who have final say in whether cases move forward or not."

Meanwhile, state Rep. Ben Smaltz, R-Auburn, said he believes the real danger in the sports wagering legislation is the ability for Hoosiers to place bets anywhere and any time using their mobile devices, instead of having to visit one of the state's 13 casino properties.

"We've kept gaming pretty tight to our properties. This is a monumental policy shift," Smaltz said. "I'm not excited about having sports wagering in my community anywhere."

Smaltz also worries about the next gaming expansion to come: "When there's new people here (in the House), and somebody comes and says, 'Isn't this silly? We can bet on a football game, but I can't play blackjack on my phone and I can't play roulette on my phone?'"

If the gaming legislation is enacted by the governor, or permitted to become law Thursday without his signature, sports wagering will be legal in Indiana starting Sept. 1.

The measure also permits the relocation of Gary's Majestic Star casinos from Lake Michigan to a land-based site, likely adjacent to the Borman Expressway, authorizes a new casino in Terre Haute, allows live dealers at the central Indiana horse track casinos starting next year, and reduces tax rates on all casinos and racinos.

It last month passed the Republican-controlled House, 59-36, and the Republican-controlled Senate, 37-12.