Why Legalizing Online Casinos Will Not Hurt Indiana’s Retail Casinos

Posted on June 22, 2023 - Last Updated on July 12, 2023

Indiana was among the first states in the U.S. to legalize online sports betting in 2019. Nearly four years later, it can do the same with online casinos.

The first attempt to legalize online casinos in Indiana occurred earlier this year when Rep. Ethan Manning authored a bill to allow online table games. He chose not to take it to a hearing, citing the need for lawmakers and the public to better educate themselves on why the matter is important.

Only six states have legalized online casino gambling, compared to 28 with online sports betting and soon to be 37 states with some form of sports wagering.

One reason for the discrepancy could be that sports betting became legal nationwide in 2018, creating a new industry for retail and mobile sportsbooks. Retail casinos have existed for decades in states like Indiana, and online casinos could be viewed as a threat.

Online casino cannibalization is unfounded

Despite concerns that online casinos will poach customers away from longstanding brick-and-mortar establishments, we have seen enough proof from other states to show that both can exist without hurting the other.

Retail casinos in states like Michigan, Pennsylvania and New Jersey have continued to prosper as iGaming has emerged. While the two are similar, they are different enough to attract separate player pools for various reasons.

Furthermore, iGaming is positively affecting retail casinos’ future growth projections. New players, especially those who don’t live near a retail casino, are playing and learning new games without the stress and pressure of finding a slot machine or slowing down play at a table game.

This is especially true for younger players who otherwise would not make trips to retail casinos. These demographics have proven to contribute to online sports betting and casino gaming, and brick-and-mortar venues are looking to capitalize just the same.

iGaming will not cannibalize retail casinos. If anything, it will create more room for growth.

Pros and cons of retail and online casinos

Online and retail casinos each have strengths and weaknesses, further distinguishing their draws to different people. Let’s look a little closer.

Some benefits of online casinos include:

  • Multiple casinos to choose from in the palm of your hand.
  • A vast selection of games and titles, including live dealer games.
  • Less time investment needed.
  • Low deposit limits and betting stakes.

Retail casinos boast their own pros:

  • Many players prefer the social environment.
  • Greater stimulation, both inside the casino and while playing many games.
  • Higher jackpots.
  • Nicer casinos have full-scale resort amenities like fine dining, spa services and hotel rooms.

Both have drawbacks, though. Some pertaining to online casinos are:

  • Playing alone.
  • A much less immersive environment.
  • Games move more quickly than at retail casinos, meaning your risk can be higher than you think.

Lastly, the negatives of retail casinos:

  • Travel requires time and money for other expenses.
  • Higher betting limits, sometimes with worse odds.
  • Slot machines and table games may be full, unavailable or not running.

Both overlap in one crucial area: They operate in regulated markets where state governments require strict adherence on issues such as:

  • Responsible gambling promotion and providing ample resources for at-risk gamblers and family members.
  • Player verification processes to prevent illegal money activities and underage gambling.
  • Employing geolocation technology that requires all players to be in a given state’s territory.

Digital markets are helping retail casinos

A study from Dr. Kahlil S. Philander at Washington State University in 2021 confirmed that online and retail markets had a negligible effect on one another.

Another one came a year later from the Indiana Gaming Commission with the same results.

Looking deeper, we can actually find examples of how online casinos are helping brick-and-mortar locations.

  • Caesars has recorded over $200 million in wagers at its retail casinos from digitally sourced customers.
  • According to MGM Resorts International CEO Bill Hornbuckle, BetMGM users make up 40% of new sign-ups to the MGM Resorts loyalty program.
  • PENN Entertainment’s customers aged 21-44 doubled their revenue contribution percentage from 2017 to 2021.

Indiana trying for online casinos again in 2024?

Even with this year’s efforts to legalize iGaming falling short, experts believe Indiana is one of two states most likely to pass legislation in 2024.

Online casino tax revenue exceeds sports betting in legal states by as much as triple. That’s led to more than $817 million in Michigan since launching in January 2021.

New Jersey and Pennsylvania’s lifetime iGaming taxes are even higher, at $928 million and $1.4 billion, respectively.

If lawmakers listen to Rep. Manning and study the issue, the Hoosier State can follow its own path from sports betting and create another significant revenue stream, once more setting an example for the rest of the country to follow.

Of course, hurdles will remain around the specifics of potential legalization. Lawmakers will need to agree on a framework that best serves customers and state coffers. Otherwise, they will have to go back to the drawing board.

Either way, Indiana has a better shot than most states at welcoming online casinos within its borders in the next few years.

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Hill Kerby

Hill Kerby is a proponent of safe, legal betting, and is grateful to be able to contribute to growing the industry. He has a background in poker, sports, and psychology, all of which he incorporates into his writing.

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