Indiana Bets on Gaming

Attorney Marc Lopez and Zac Bailey discuss the upcoming changes to the gaming laws in Indiana.

Late in the afternoon on Wednesday, May 8, Governor Eric Holcomb signed a bill that will legalize sports betting in Indiana. With the Governor’s signature on House Enrolled Act No. 1015, Indiana is set to become the tenth state—along with Nevada, New Jersey, Rhode Island, West Virginia, Pennsylvania, Delaware, Mississippi, New Mexico, and Montana—to legalize sports betting, following a 2018 U.S. Supreme Court decision that struck down the federal ban. In addition to increasing the number of lawful recreational activities in Indiana, the bill will permit in-state casinos to relocate to Gary and/or Terre Haute. It will also allow for live, flesh-and-blood dealers in two Indianapolis-area gaming establishments.

So what does this mean for Hoosiers and those in surrounding states? For guidance, we can look to New Jersey, where a bill substantially similar to Indiana’s was recently passed. New Jersey’s strategy also involved a mobile betting provision, and it’s caught on in a big way. In the first month of legalized online gambling, more than 125,000 new accounts were created. More recently, it’s been reported that over 80% of New Jersey’s bets are being made from mobile devices. Will Indiana experience similar results?

Indiana defines gambling as “risking money or other property for gain, contingent in whole or in part upon lot, chance, or the operation of a gambling device.” If you’ve done this “knowingly or intentionally,” you’ve committed unlawful gambling, which starts as a Class B misdemeanor. Indiana’s definitions are broad enough to reach plenty of commonly accepted activities, so long as they involve a risk to property. This includes NCAA tournament brackets, fantasy football, and even golf course wagers between friends. The statute also makes a point of declaring gambling over the internet—which starts as a Level 6 felony—to be a more serious offense.

Of course, we have to make some statutory allowances. For one thing, there’s the Hoosier Lottery, which we embrace for the sake of tax revenue. Then there are exceptions for gambling at racetracks (like the Indiana Grand in Shelbyville), riverboat casinos (on Lake Michigan and the Ohio River), and charitable events (which is why it’s okay for a church to host Bingo Night).

The shift to legalized sports betting in Indiana is expected to provide peace of mind for almost all participants. For one thing, bettors will no longer have to worry about whether their actions are criminal. For another, an above board gambling enterprise will allow for recourse in the case of mistake. In other words, gamblers will finally have access to customer service, which has never been a big priority for black market bookmakers, whether local or based in the Caribbean. “What offshore books don’t allow is what happens with a patron dispute process,” observes Jennifer Roberts, associate director of the International Center for Gaming Regulation. She goes on to explain that “[t]here’s a process through regulation that oversees . . . [i]f you have a dispute over whether you should be paid, or whether you made a bet and there’s an error with the ticket.” Given the choice, we all want at least the possibility of customer service.

The American Gaming Association estimates that Americans annually wager $150 billion on the black market, with much of that coming from mobile betting sites based outside of U.S. jurisdiction. The fact of the matter is, mobile betting is already an option for folks in Indiana—albeit an illegal one—and this ease of access may partly explain the new legislation. Sara Slane, senior vice president of public affairs for the AGA, clarifies the pragmatic approach: “[Indiana’s] bill enables conveniences like mobile wagering and a safe alternative to the pervasive illegal market for the millions of Hoosiers who are already betting on sports.”

The U.S. has laws like the Unlawful Internet Gambling Enforcement Act that are designed to stop overseas bookmakers from taking money from stateside bettors. For example, domestic banks are required to flag “restricted transactions” in which a “person engaged in the business of betting or wagering” knowingly accepts payment “in connection with the participation of another person in unlawful internet gambling.” The most popular overseas gambling operations, however, offer workarounds for these regulations, with payments made using cryptocurrency (like Bitcoin) or non-American banks.

We’re not threatening you. We’re just reminding you what the law says.

Under the new law, bettors will be able to rest assured that their money is safe, which means a lot more if you remember the agonizing events of April 15, 2011. On that date—also known as Black Friday to American gamblers—the founders of PokerStars, Full Tilt Poker, and other digital gaming companies were indicted on charges of bank fraud and money laundering. Bettors who attempted to patronize these sites were greeted with a scary-looking notice of seizure from the federal government. The targeted sites subsequently issued statements to clarify that U.S. citizens were banned from using their services, but players from other countries were still welcome. Soon after, following negotiations with the U.S. Attorney’s Office, it was announced that domestic gamblers would soon have the option of requesting the withdrawal of their funds. This was a nice option to have; it would’ve been a lot nicer if Full Tilt Poker hadn’t had $390 million in outstanding commitments and only $60 in its accounts.

So how will the new gaming standards work in Indiana? The impact won’t be immediate, but sports betting could be available as soon as September 1, 2019. At one point in the process, the Indiana House removed the mobile betting provision from the bill, but the Senate determined that prohibiting mobile betting would be an unreasonable limit. According to the finished law, gambling on both collegiate and professional sports will be allowed, and bettors will be able to place wagers in person at a casino or remotely using a mobile device.

There were some preliminary concerns that sports betting could complicate Indiana’s involvement with hosting collegiate athletic championships. The NCAA used to righteously insist that its championship events could not be held in states that offered legalized sports gambling. Within the last two weeks, that policy has been changed.

While several Midwestern states have recently introduced bills on legalized gambling, Indiana is the first to formally pass the legislation (Iowa followed suit on May 13, 2019). This law is a win for all Hoosiers, not just risk-takers and bookmakers. Adventurous souls from surrounding states will now be incentivized to travel to Indiana in pursuit of glory, and the state will collect taxes from this new revenue stream at a rate of 9.5%. For Governor Holcomb, expectations are justifiably high, and Indiana has nowhere to go but up: “[T]his legislation will spur positive economic growth for our state and . . . it will bring in new revenue and create hundreds of new jobs—both permanent and in construction.”

In addition to convenience, mobile betting will also provide patrons with the opportunity to make bets in real time during sporting events, an area in which offshore operations have traditionally held a significant advantage over physical casinos. A live line evolves as the game or match progresses, offering bettors the chance to predict a comeback or hedge an earlier bet. This only works, of course, if bets can be place instantaneously, which makes this model difficult to reproduce at brick and mortar gambling establishments. If this is the sort of action you’re after, you’re better off with mobile gambling or an online casino, because waiting in line defeats the entire purpose of a live line betting experience.

Overall, House Enrolled Act No. 1015 will provide Hoosiers with a safe and legal way to bet on sports and other games of chance. Rookie gamblers will have the opportunity to make March Madness a little more exciting, and seasoned vets will be able to enjoy a little peace of mind.