Indiana Collected $1 Billion In Gambling Taxes During The Past Year

Posted on October 12, 2022 - Last Updated on February 23, 2023

For the first time in a decade, gambling-related tax revenue in The Hoosier State exceeded $1 billion in a single year.

When all forms of legal gambling are considered, the state of Indiana collected $1.04 billion between July 2021 and June 30, 2022. That’s an 8% increase from $958.3 million during the 2021 budget year.

Rising Indiana casino tax receipts were a big part of the upswing.

End of casino restrictions drove growth

The Indiana Gaming Commission announced that taxes levied from $2.5 billion worth of casino winnings generated $660.2 million for Indiana during the 12-month period. This was about $100 million, or 17.9%, more revenue than the previous budget year.

Casinos and racinos had a moderate growth of 13%.

Land-based venues no longer operating under COVID-19 restrictions are largely responsible for the hike in tax revenue. That plus the new Hard Rock Casino in Gary helped northern Indiana grow by about 26%.

According to Greg Small, executive director of the Indiana Gaming Commission, many gamblers returned to casinos after pandemic restrictions went away.

“After experiencing negative pandemic-related impacts in FY 2021, the gaming industry rebounded in FY 2022. The industry broke revenue records nationally and Indiana casinos posted significant year-over-year increases that boosted Indiana tax revenues.”

Indiana online casinos could further boost revenue

Indiana presently offers online sports betting, but online casino gaming could also be on the way soon. That could greatly expand the state’s tax revenue in the future.

In February, the Indiana Gaming Commission contracted Spectrum Gaming Group to conduct a study on the feasibility of IN online casino gaming. The findings could sway legislative efforts in 2023.

Spectrum employed three methods to project Indiana iGaming revenue over its first three years based on results from other online casino states:

  • Estimated spend per adult
  • Spend as a percentage of gross state product
  • Spend as a percentage of personal disposable income

“We also projected the gaming-tax receipts that would be generated by prospective iGaming,” Spectrum wrote in the study. “We did so by using three illustrative flat tax rates – 20%, 30% and 45%.”

Spectrum discovered that there are few direct employees in online casino operations and little capital investment in buildings. Therefore, offering lower tax rates on iGaming than on land-based gaming could boost participation.

Projected Igaming Revenue and Gaming Tax Receipts

Results from six igaming states – Connecticut, Delaware, Michigan, New Jersey, Pennsylvani, and West Virginia – indicate that iGaming would not have a negative impact on Indiana casino revenues.

Seven states in the US currently offer legal online casinos. Nevada only has internet poker. Michigan, New Jersey and Pennsylvania are the “big three iGaming states.” They each generate more than $1 billion in gross gaming revenue annually.

Six Igaming States

The big three are also a window into Indiana’s online casino potential, seeing as they have more solid and extensive commercial gaming industries.

Indiana houses 13 commercial casinos. They produce more than $2.7 billion in gambling winnings each year. According to the study, $940 million in tax revenue could come from online casino gambling over three years, depending on the tax rate.

That’s in addition to the $1 billion or more that Indiana is already generating without iGaming.

New gambling facilities add to the pile

Another $31.2 million in revenue for the 2022 budget year came from sports betting. Hoosiers wagered over $4.5 billion on sports last year.

The second largest tax revenue contribution behind casinos, however, came from the Hoosier Lottery at $344.4 million. Finally, an additional $2 million came from a variety of minor taxes from charity gaming activities and horse racing.

All in all, total revenue saw the state top $1 billion for the first time since the 2012 budget year. It should be understood that during this time, higher casino taxes brought in more than $800 million a year.

Small pointed out that the strength of Indiana’s gaming industry shone through once Caesars decided to invest a total of $73.7 million for projects at the state’s two racinos in Shelbyville and Anderson.

Horseshoe Indianapolis concluded its $33.7 million refurbishment earlier this year. It included an expansion of the facility’s gaming floor by 25,000 square feet.

Harrah’s Hoosier Park in Anderson is undergoing a $40 million expansion of its own. The project should be complete by next July.

Churchill Downs is also building a new $110 million casino new in Vigo County. Queen of Terre Haute plans to open for business late next year.

Adding a new casino into the mix and expanding existing facilities should help boost Indiana’s numbers over the next few years. Especially if the state adds online casinos soon, $1 billion years could become much more commonplace for Indiana in the near future.

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