Suddenly, Northwest Indiana Casinos Encounter Pressure From Illinois

Posted on June 17, 2019 - Last Updated on December 10, 2019

While Illinois SB 690 awaits the signature of Gov. JB Pritzker, interested parties are working feverishly to prepare for the eventual casino expansion and rollout of legal sports betting in the Land of Lincoln. That includes gaming operators in one of Illinois’ neighboring states, Indiana.

Data compiled by Ball State University economics professor Mike Hicks shows that 70% of the customers at northwest Indiana’s casinos are actually residents of Illinois. The legitimate concern that operators of those facilities have is that habit may give way to convenience when Illinois’ new facilities get up and running.

Adapt or become obsolete for Indiana casinos

In the economic applications of the philosophy of social Darwinism, for-profit entities are faced with the same phenomenon of environmental pressure that has shaped the progression of species on Earth for millions of years. The introduction of legal sports betting and two new casinos where many of the current patrons of northwest Indiana’s casinos live are examples of such.

Economic research shows that the less resistance there is to acquire a good or service, the more likely it is that consumers will spend their income doing so. Less travel to enjoy gaming opportunities not only decreases that resistance in terms of convenience but also travel expenses, leaving more of that income to spend on the actual action.

Add to that the fact that non-casino facilities in the Chicago metro, like Soldier and Wrigley fields, will be able to offer legal betting to fans soon, and the likelihood of traveling to Terre Haute to place wagers decreases further. To combat those pressures, northwest Indiana’s gaming facilities will have to mimic the American bison and adapt.

Northwest Indiana’s survival plan

One possible strategy is to rely upon the strength of habit of patrons. Casino guests who have made habits of visiting casinos in places like Hammond regularly for years might be averse to new surroundings and bear the expense of continued travel for the benefit of familiar ground. Beyond that, a solid strategy will be offsetting the cost of travel with the cost of goods and services offered.

SB 690 will tax sportsbooks in Illinois at a rate of 15% and further increases already-heavy casino taxes. Conversely, Indiana sportsbooks are taxed at a rate of 9.5%.  Additionally, players are required to pay taxes on all winnings. All of this tax revenue resulting from sports betting will benefit Indiana and its residents.

The lower operating cost permits Indiana’s books to potentially offer better odds. The same could be said for casino games. The lower tax rate in the Hoosier State could allow Indiana’s facilities to offer better payouts at slots and table games.

On a further note of sports betting, Illinois’ law bans wagering on all school contests. That includes the University of Illinois. Indiana’s legal framework contains no such restrictions, which would allow Illinois residents who desire to place wagers on Fighting Illini American football or men’s basketball games to do so if they are willing to make the trip.

Legal sports betting, especially land-based, isn’t a highly profitable venture in and of itself. It’s more of a lure for foot traffic for the facilities that offer it, in hopes that consumers will also spend money elsewhere on more profitable amenities.

The advantages for Indiana

Abundance and luxury of amenities is a final way northwest Indiana facilities can combat new competition. If all the trappings surrounding the gaming — like entertainment options, accommodations, and menu items — are vastly superior to the amenities offered by the new Illinois facilities, the chances Illinois residents will continue to make the trip improve.

One of the clear advantages that current Indiana facilities have over their future Illinois competitors is a head start. Legal sports betting in Illinois hasn’t been rolled out yet, and Indiana could get there first. Similarly, the new casinos in Chicago and southern Cook County haven’t broken ground at this point.

Indiana’s casinos have time to prepare for the effects of these “invasive species” but need to plan their strategy carefully. A bad plan for adaptation could send them the way of the woolly mammoth.

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Derek Helling

Derek Helling is a lead writer for PlayUSA and the manager of BetHer. He is a 2013 graduate of the University of Iowa and covers the intersections of sports with business and the law.

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