Indiana lawmakers have taken a significant step toward legalizing online gambling, as the House Public Policy Committee voted 9-2 to advance House Bill 1432. The proposed legislation would authorize digital lottery and casino gaming, allowing Hoosiers to legally access these platforms. The bill now moves to the full House for further consideration.
House Bill 1432, introduced by Rep. Ethan Manning, sets out a regulatory framework for iGaming, granting the Indiana Gaming Commission authority over licensing and operations. If passed, the commission could begin accepting license applications immediately, with online gaming expected to launch on September 1, 2025. Indiana‘s casinos and racetracks would be eligible for a single iGaming license, each allowing up to three online gaming “skins.” Licensing fees would start at $500,000, with renewal costs to be determined by the commission.
The bill outlines a 26% tax on adjusted gross revenue for the first year, transitioning to a tiered tax system ranging from 22% to 30% depending on operator earnings. Additionally, amendments passed during the hearing increased the online sports betting tax from 9.5% to 20%, a move that drew some criticism from gaming operators.
Addressing Illegal Gaming and Responsible Gambling
Proponents of the bill argue that legalizing iGaming would curb illegal online gambling, directing revenue to the state while enforcing consumer protections. John Pappas of the iDevelopment and Economic Association highlighted that illegal operators often mislead Indiana residents by falsely presenting themselves as legitimate businesses, sometimes even using the state’s seal in advertisements.
“These (illegal) casinos have no oversight, no consumer protections, and zero revenue for the state,” said Brandt Iden, government affairs director for Fanatics Betting & Gaming, cited by Terre Haute Tribune-Star. He noted that states like Michigan have successfully forced offshore operators to exit their markets by implementing strong regulatory structures.
The legislation also emphasizes responsible gambling initiatives, establishing the Indiana Responsible Gambling and Problem Gambling Services Program. Under the bill, $500,000 annually would be allocated to the program, with operators contributing through an annual fee of $250,000. If additional funding is required, licensees would be invoiced based on market share, with total contributions capped at $2 million per year.
Industry Reactions and Concerns Over Market Impact
The proposal has sparked debate among industry stakeholders. Some casino operators support the measure, arguing that regulated online gaming will enhance state revenue and provide economic benefits. However, others, including representatives from Penn Entertainment and Churchill Downs, expressed concerns over potential market cannibalization. Penn’s John Hammond stated, “Cannibalization is real,” pointing to potential revenue losses for land-based casinos.
Despite these concerns, Boyd Gaming voiced support for the bill, citing its partnership with FanDuel as evidence that online gambling can coexist with traditional casino operations. Lawmakers also debated the introduction of electronic pull-tabs, which some fear could compete with iGaming. Penn Entertainment’s opposition to the bill stemmed in part from this issue, with one lawmaker expressing frustration over casino objections to pull-tabs while profiting significantly from other gaming avenues.
Next Steps and Future Outlook
With committee approval secured, House Bill 1432 will proceed to the full House for further debate. If passed, it must also clear the Senate, where additional scrutiny is expected. Lawmakers remain divided on certain provisions, particularly the revised sports betting tax and the potential impact on land-based casinos.
Meanwhile, tribal gaming authorities have expressed support for the measure. The Pokagon Gaming Authority, which operates a casino in South Bend, welcomed the amendments allowing tribal participation in iGaming. “The bill as amended will achieve the Pokagon Band’s primary goals,” said General Counsel Paul Shagen, emphasizing that it ensures fair competition while respecting the tribe’s sovereign status.
As the legislative process continues, industry stakeholders and responsible gambling advocates will closely monitor developments, shaping the future of online gaming in Indiana.
