The race for gold in US sports betting grows more and more captivating as more and more states merge onto the track toward legalization.
Monthly revenue reports from regulators act as the mileposts in new markets, allowing us to periodically measure which are speeding ahead and which are falling behind.
Indiana’s industry is still climbing, but data published over its first 16 months does provide a meaningful preview of its potential in the decades to come.
So what did we learn from the first full year of regulated sports betting at the Crossroads of America?
Hoosiers really like to gamble on sports…
The most obvious takeaway from Indiana is quite simply its quick success. In the time it takes some states to fix a pothole, Indiana sports betting has grown from literally nothing to a robust gaming industry.
It generates eight figures of monthly revenue without even breaking a sweat.
Here are the vital sums for the 2020 calendar year:
- Handle: $1,769,270,606
- Revenue: $136,395,416
- State Tax: $13,165,417
That $1.77 billion wagered through legal channels makes Indiana the fifth-largest regulated market in the US. Only Nevada, New Jersey, Pennsylvania, and Illinois saw more action last year. The latter has yet to finalize its reporting.
Despite a number of factors working against them, operators in the Hoosier State still managed to rattle off a string of four consecutive record months to end the year. December’s $313 million handle represents the current high-water mark for now, with the first report of 2021 still outstanding.
Uncle Sam got his share of the Indiana sports betting proceeds in 2020 too, skimming 3.24% of total revenue ($4.42 million) from the market in the form of a federal excise tax.
…And so do the neighbors
Folks in Indiana aren’t the only ones in the neighborhood who like to gamble on sports. Visiting bettors who reside outside of the state also contributed substantially to those big first-year numbers.
Proximity to Chicago creates an especially lucrative proposition for the two active sportsbooks in the northwest corner of the state. This was particularly true prior the rollout of online sports betting in Illinois.
Ameristar East Chicago and Horseshoe Hammond together accounted for more than one third of all retail handle in Indiana for the year. Their location will continue to act as an asset even as the neighboring market matures.
It isn’t just Illinois though.
Action was brisk all along the Ohio River, including droves of visitors to Lawrenceburg from the Cincinnati metro area.
Hollywood Casino was responsible for 25% of the state’s total retail handle by itself, more than either of the Lake County sportsbooks mentioned above. It is, in fact, one of the largest retail sportsbooks in the country outside of Nevada.
Kentucky bettors seemingly logged their fair share of miles crossing the bridge to gamble, too. Caesars Southern Indiana was the fifth-busiest sportsbook in the state in 2020, with bettors from Louisville bolstering its 6% market share.
Neither Ohio nor Kentucky have legal sports betting within their own borders.
Online sports betting is the cornerstone of a healthy market
As has been the recent trend in even the healthiest of times, online betting represents a growing share of the total gambling activity in this country.
More than 83% of sports betting in Indiana was conducted via the internet last year – either on the web or through a sports betting app. That actually represents a tighter margin than most similar states.
This underscores the comparatively large draw of those brick-and-mortar casinos near the borders.
New Jersey and Pennsylvania, by comparison, both generated about 92% of their wagers online in 2020.
These data points only work to reaffirm what is already an established truth for the industry. Even under optimal circumstances, a sports betting framework that doesn’t include online options will only ever reach a fraction of its full potential.
That dynamic became even more pronounced as the COVID pandemic took hold in 2020, at one point shuttering every physical sportsbook in the country. Associated revenue in states without online gambling dropped to zero.
Those with a digital industry in place were at least able to stem some of the losses.
Like virtually everything in 2020, the coronavirus really shaped the breakdown of sports betting handle across retail and online channels in Indiana.
DraftKings and FanDuel are hard to beat in any state
Here’s another takeaway that won’t surprise anyone: DraftKings and FanDuel are the early leaders in Indiana. The two fantasy sports giants have grabbed the proverbial bull by the horns in this post-PASPA era.
The brands are rekindling their old rivalry in a newer (and much more profitable) arena.
They share the podium in every market they serve — typically holding down the top two spots among all brands in any given state.
DraftKings alone booked almost $720 million in wagers in Indiana last year, accounting for 49% of the online market to lead all individual operators. FanDuel was firmly in second place with just over $500 million in handle.
The eight other brands combined to generate the remaining $250 million or so together.
Together, the dynamic DFS duo accounted for a whopping 84% of online handle (and 70% of the total across all channels). BetMGM seems to be on the move, though, increasing its third-place share to a new high of 16% in December.
Here’s how the relative share of online handle looked for the full calendar year:
See more detailed data for each reporting month here.
A nod of appreciation for Indiana sports betting policymakers
The word “industry-friendly” is sometimes used to describe Indiana’s framework, and it is certainly a fitting adjective.
Lawmakers drafted a well-conceived framework for a competitive market. It has moderate fees and taxes, giving operators some breathing room to innovate and differentiate.
Regulators subsequently carried the baton across the finish line with uncommon timeliness and transparency. They quickly turned words on the page into a living, breathing, moneymaking industry.
New states starting down the path toward legalization could do worse than to follow in Indiana’s footsteps.
You may also recall that Indiana was the first state in which lobbyists pitched the idea that sports organizations are entitled to a direct share of betting handle.
Lawyers invented the narrative that such fees were necessary to offset some unspoken and immeasurable harm that might be brought about by the expansion of legalization. These payments, they argued, would hardly even register as a blip on the balance sheet.
Every regulated state, including Indiana, has so far had the good sense to reject this notion.
Had lawmakers included the proposed integrity fee in their framework, Indiana operators would have paid out an additional $17.7 million in 2020.
That equates to roughly 13% of their total gross revenue. It is also substantially more than the $13.2 million in tax revenue the state collected.
You don’t have to be particularly sharp to understand that such a system only takes money out of the hands of bettors, operators, and the state itself.
Despite not giving leagues like the NBA and MLB a handout, no serious integrity concerns have arisen from the regulated sports betting industry in Indiana to date. And that is perhaps the most important takeaway of all.