The History of Gambling in Indiana

Updated on October 22, 2019

Just a few decades after the Indiana territory became the 19th state, its people started making decisions for themselves on the subject of gambling. From complete prohibition to a total embrace, 160 years of Indiana gambling history pens an interesting story.

The story of changing attitudes and evolving laws has transformed the Hoosier State economy. The involvement of notorious figures and political squabbles happened along the way.

Indiana gambling history starts in the best place: the beginning

The US Congress admitted Indiana to the union on December 11, 1816. For almost four decades after, there was no law on any type of gambling in the state.

That changed drastically in 1851, however. The people voted to amend the constitution to outlaw lotteries. Because of that, state courts interpreted the constitution to outlaw all forms of gambling.

Gambling of all forms went into a “black market” for the next 130 years. While it’s debatable how regularly the state’s laws were enforced, no legal gambling was practiced.

In the late 1980s, however, a few citizens of the Hoosier State pushed for change. The result was years of backroom deals in the state legislature.

Sweeping changes begin with the Hoosier Lottery

In 1988, voters in Indiana approved a new constitutional amendment. It repealed most of the 1851 amendment as far as a state-regulated lottery went.

A year later, the Hoosier Lottery began operations. The 1988 amendment had other consequences that year.

The state legislature used the leeway granted by the amendment to authorize pari-mutuel betting, more commonly known as betting on horse races. That wide interpretation of the law inspired other aspirations in the northwest corner of the state.

The individuals with those ambitions probably had no idea of the can of worms they were opening. Regardless, the proverbial feces was about to hit the fan.

The fight to bring casinos to the Hoosier State

Late in 1989 mayor of Gary, Thomas Barnes made his move to allow casinos in the town. Although the state legislature initially rejected Barnes’ initiative, the assembly did allow the voters of Gary to hold a referendum on the issue. That non-binding measure passed with 60% of the vote.

While Barnes worked to acquire the land for future casino use, state legislators sought to open the entire state to casino games for the first time. Assembly members introduced a bill to authorize riverboat casinos in Indiana in late 1990.

It wasn’t to be, however. The bill never reached the full Senate. That would be the case again in 1991. In 1992, another attempt made some progress by reaching the full Senate floor.

It was voted down, however. Meanwhile, the Hoosier Lottery worked with a few other state lotteries to create one of the nation’s most popular products, Powerball. That may have been what finally got a casino bill over the hump.

Charlie Brown makes Indiana gambling history

The state representative who had introduced the several failed measures to legalize riverboat gambling in Indiana shares a name with the most famous Charles Schultz character. Charlie Brown, a Democrat from the state’s 3rd District, was the biggest proponent of the movement.

In 1993, the state legislature failed to pass a budget before the spring session expired. Governor Evan Bayh called a special session to address the issue and that was just the opportunity that Democrats needed.

In exchange for agreeing not to raise income or property tax rates in the state, Republicans agreed to approve Brown’s bill. The days of having the figurative football pulled away from Brown were over.

The law now allowed for the approval of as many as 11 water-based casino game licenses. Five of them were allocated to Lake Michigan, another five to the Ohio River and another to Patoka Lake.

The licenses required approval by local voters, however. County governments held referendums in November of 1993 and throughout the year, with most of them passing. Also of note in 1994, the Pokagon Band of Potawatomi Indians gained federal recognition.

The next few years saw explosive growth in the gaming industry in Indiana. The period birthed much of the current gambling landscape in Indiana.

Off-track betting parlors, racetracks and riverboat casinos, oh my!

In 1994, Hoosier Park became the first racetrack in the state. The first off-track betting parlors opened the following year. The first riverboat casino opened in December of 1995 in Evansville.

The two Gary casinos which were the start of all the drama eventually opened in 1996. The Trump Princess, yes that Trump, and the Majestic Star began operations in June of that year.

Two boats on the Ohio River opened in October, the Argosy and the Grand Victoria II. Blue Chip opened in August of 1997. Caesars on the Ohio River opened in November of 1998.

Belterra was the next to open in October 2000. Indiana Downs became the state’s second racetrack in 2002.

Though early returns at the state’s riverboat casinos were promising, the explosion of the worldwide web into a commercial force took gaming into uncharted waters. Demand for games surged nonetheless.

Further legislative changes after the turn of the century

An amendment to existing language in the state’s gambling regulations was proposed late in the 2005 legislative session. The new bill altered the state law to make any use of the Internet for gambling purposes in the state illegal.

The following year, gambling regulations in Indiana changed again. Legislators altered the gaming code to allow the state’s two racetracks to also offer slots and table games. In the same year, the Pokagon Band of Potawatomi Indians opened the Four Winds Casino in New Buffalo.

Over the following two years, both Hoosier Park and Indiana Downs converted to “racinos.”  In 2012, the operators of the Four Winds announced intentions to become the state’s first land-based casino on a parcel of land near South Bend.

Coupled with new competition from nearby states like Illinois and Michigan, that move created the need for further changes. In 2015, the state approved a measure to allow casinos to become permanent land-based structures.

One of the consequences of that was the establishment of the Tropicana in Evansville in 2017. The Four Winds reopened in its current location in 2018.

The increasing popularity of paid daily fantasy sports contests, a precursor to single-event sports betting, got the attention of Indiana’s state government the following year.

DFS and Indiana sports betting brings us into the present

In 2016, Indiana became the second state to offer regulated daily fantasy sports when then-Indiana Governor Mike Pence signed the bill. The new law not only created a licensing structure for DFS in Indiana but also defined the contests as games of skill.

The Hoosier State soon became the site of a lawsuit that involved publicity rights in daily fantasy games. In 2018, Indiana’s Supreme Court ruled on a case brought to it by three former NCAA football players.

The players argued that DFS sites like DraftKings and FanDuel using their images, names, and likenesses without their permission violated state law. The court eventually ruled in favor of the defendants in October of 2018.

2018 also saw a landmark US Supreme Court ruling that opened the door for Indiana to partially repeal its ban on Internet gambling along with open up a new avenue for its land-based facilities to get revenue.

The winding road to the present state of Indiana sports betting

When the US Supreme Court overturned a lower court ruling in Murphy v. NCAA, the process of individual states legalizing sports betting within their borders began.

The wheels began turning in the Hoosier State not long after the Professional and Amateur Sports Protection Act was overturned. Bills appeared in both chambers of the Indiana legislature in January 2018.

Initial versions of the bills included tenants that required legal sportsbooks to pay an “integrity fee” to professional sports leagues like MLB and the NBA. It also gave those leagues limited power to restrict gambling on some of their games.

Those bills were defeated, however. Later versions made a different concession to lobbyists for the leagues, requiring books to purchase “official” data from the leagues to set their bets with.

Like the integrity fee, that official data mandate went by the wayside. The same thing happened with other provisions in the bill that would have allowed multiple casinos to relocate.

While these preliminary bills were larger in scale than the existing law, the matter of online casino games and slots was never seriously raised. At present, Internet slots and table games remain illegal in Indiana and there is little momentum to change that.

The final matter that was debated in the movement to legalize sports betting in Indiana is whether it would include mobile sports betting. There was initial staunch opposition to its inclusion, as a bill that relegated sports betting to physical books only passed the House, but weren’t approved by the Senate.

All the deals and debates throughout 2018 and early 2019 produced the final version of a bill to legalize sports betting with online betting included. The state’s legislature approved it with confidence that it would become law.

Holcomb’s signature and the future of Indiana gambling

On May 8, 2019, Indiana Governor Eric Holcomb signed that bill into law. It not only had the effect of legalizing both land-based and online sportsbooks but also put the Indiana Gaming Commission in charge of its regulation.

Indiana gambling history was made on Sept. 1, when the first legal physical sportsbooks in the state began accepting wagers. History was made again when online sports betting in Indiana launched in October 2019.

For over 160 years of history in the Hoosier State, the story of Indiana gambling has been about exactly that: evolving attitudes that have led to changes in the law. No one can say for sure what it might look like in another 160 years, but right now, the state is one of the leaders in the industry.