Indiana Online Casinos Won’t Cannibalize The Retail Industry

Posted on February 7, 2023

Online casinos could be coming to Indiana in the very near future. A bill to legalize internet gaming is currently making its way through the state’s House of Representatives.

However, a new report has raised concerns about Indiana online casinos cannibalizing retail ones.

There are major differences between the report and the reality of what’s happened in other states that have online casinos. It also paints a different picture compared to another major study that looked into the potential of cannibalization in Indiana.

Two reports differ on Indiana casino cannibalization

A new report from the state of Indiana suggests that online casinos will cannibalize the state’s retail industry. In other words, it’s predicting that the online side of the industry will take away business from the in-person side.

The report mentions that up to 30% of the casino business will vanish to head online instead. That’s a vastly different outcome compared to what Spectrum Gaming Group found in its study.

The Indiana Gaming Commission is in charge of regulating gambling in the Hoosier State, and the group commissioned Spectrum’s study last year in anticipation of a push to legalize online casinos in 2023.

Spectrum’s report found that the state’s retail casino business will not be hurt by introducing internet casinos.

“Based on the evidence from the states where iGaming has been introduced, there is little, if any, cannibalization of revenue from established casinos.”

The differences between the state’s report and Spectrum’s study are night and day. So, how do they both stack up to reality? Which one comes closer to hitting the mark?

Do internet casinos hurt land-based ones?

The reality is that online casinos don’t siphon off business from their brick-and-mortar counterparts. Both sides of the business have grown hand-in-hand in states that have already given this a shot.

Michigan is a great example of this. Indiana’s northern neighbor has had online casinos for over two years now, and its industry is the closest comparison we have to what Indiana’s casino bill would create.

Michigan’s land-based numbers have held steady over the past two years.

The state’s casinos made $1.29 billion worth of revenue back in 2021. That was slightly higher than their $1.28 billion of revenue in 2022.

We’re talking about a little more than a 1% revenue difference for retail casinos ever since their online counterparts became available. That difference is likely due to the typical ups and downs of the business, and it’s certainly far less than the 30% displacement that Indiana’s new report is predicting.

That’s because online casinos introduce new customers to the industry rather than steal them from retail locations. The fact is, online players are looking for a different experience compared to gamblers that are traveling to casinos.

Online casinos attract new gamblers

Although the games that they offer are the same, the experience of using an online casino vs. a retail casino is very different. That’s a key part of why states like Michigan have been able support both sides of the industry.

Traditional casinos tend to attract an older crowd.

These older players have more disposable income and typically stick around for many of the other amenities that casinos offer. That includes things like bars, restaurants and entertainment venues.

Internet casinos, on the other hand, usually attract younger players. The same rings true for online sports betting.

Younger people are more comfortable with technology and the idea of gambling online in general.

Plus, there are gamblers that don’t happen to live nearby one of their state’s land-based casinos. For these residents, traveling multiple hours to gamble in person often isn’t worth the hassle.

The convenience of online casinos is a major advantage. It’s a key part of what internet gamblers are logging on for.

Although there’s certainly some overlap, the convenience of online casinos attracts waves of new gamblers that weren’t already betting at retail spots. That helps internet casinos to flourish without cannibalizing the in-person side of things.

The bottom line is that Indiana online casinos won’t hurt the retail industry. Both sides of the business have thrived in other states, and that’s more than likely to be the case for Indiana as well.

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Jake Garza

Jake Garza is a US Gambling Industry Analyst for Catena Media. He specializes in Midwest sports betting and casino content. Prior to covering the legal gambling industry, he spent time as a professional sports writer, reporting on teams such as the Cincinnati Bengals, Indianapolis Colts and Indiana Pacers. Garza is currently working as a Managing Editor for PlayIndiana and PlayOhio, with previous stops at other well-known brands such as PlayIllinois and PlayMichigan. He has been covering the gambling industry since 2019, and currently works with a team of other journalists to provide comprehensive coverage of the legal U.S. gambling industry.

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