Late into the evening on Wednesday, April 24th, the Indiana General Assembly voted to approve what may fairly be referred to as the most significant omnibus gaming bill in a decade. What began as Senate Bill 552 (“SB 552”), and ultimately became House Bill 1015 (“HB 1015”), passed the Indiana Senate by a final vote of 37-12 and the Indiana House of Representatives by a vote of 59-36. The bill changed several times, and in major ways, throughout the legislative session, but has sought, from the beginning, to tackle several major matters for Indiana’s gaming landscape, including: the movement (and, at one point, creation) of gaming licenses; the acceleration of live dealers at the state’s two race track casinos (“racinos”); tax rates to be paid by Indiana’s casino operators; the impact of all of these things on municipalities that are home to casinos; and legalizing sports wagering.

While the bill evolved greatly from January through Sine Die at the end of April, here’s a high-level breakdown of what the final version of House Enrolled Act 1015 (“HEA 1015”) does:

  • Currently, the Majestic Star Casino in Gary, Indiana has two gaming licenses, which are operated at one casino location. HEA 1015 authorizes the owner of the Gary casino to petition the Indiana Gaming Commission to relocate one of those licenses to a more profitable and desirable land-based location within the City of Gary. Upon doing so, Majestic will surrender one of its licenses back to the state. However, while a gaming license allows an operator to operate a statutorily prescribed number of gambling games in a stated location, under HEA 1015, while Majestic would forfeit one of its licenses back to the state upon moving to a new location, it would still be allowed to operate the same number of gambling games it is currently allowed to operate with both licenses, specifically,2,764 gambling games. Upon moving the casino, Majestic Star would be subject to payment of a $20 million fee to the state. However, this fee may be paid to the Indiana Gaming Commission over a period of five years.
  • The license surrendered by Majestic Star will be relocated to Vigo County (specifically, the city of Terre Haute). The county will undertake a public referendum process to approve the presence of a casino. Once a referendum passes, in the IGC will commence a competitive RFP process to receive proposals from any interested party for the Terre Haute casino license. The project will require a $100 million minimum investment by the prospective operator. The operator selected will be subject to payment of a $5 million license fee to the state.
  • Several additional considerations are contemplated under HEA 1015, including: (i) changes to the casino tax structure, which will lower certain wagering tax rates for casinos beginning in the year 2021 (which coincides with the next biennium for state budget considerations); (ii) an additional $2 million in tax-free promotional play for all casino properties in the state; and (iii) an amended wagering tax structure for the Majestic Star casino, should it move to a new location within Gary, which will allow it to continue to reap the benefits of being taxed as if it were operating under two licenses, for a period of eight years.
  • Allows the two racinos to implement live dealer table games beginning on January 1, 2020 (prior to passage of HEA 1015, they would be required by statute to wait until 2021 to do so).
  • Implements “hold harmless” provisions (local protections / payments) for municipalities that will be impacted by the move of the Majestic Star casino to a new location (including the cities of Hammond, East Chicago, and Michigan City, each of which are currently home to casinos), as well as those that anticipate increased competition from a Terre Haute casino (including the City of Evansville and an adjusted tax benefit for the French Lick Casino in Orange County).
  • The payments made to Evansville will be temporary in nature, beginning with a payment of $1.2 million within the first year of gaming operations in Terre Haute, by the Terre Haute operator, and decreasing from there over a three-year period. The payments being made to the three cities located in Northwest Indiana will be made by the City of Gary and will remain in place for the first four fiscal years after gaming operations commence at the new Gary location. The tax adjustment for French Lick is ongoing, beginning in fiscal year 2021.

Finally, and ironically, possibly the least controversial item contemplated under this legislation, HEA 1015 legalizes sports wagering throughout the state of Indiana. While most stakeholders thought this would be an uphill battle at the outset of the legislative session, the focus quickly shifted to license relocation and allowed sports wagering to pass with ease (albeit amidst public pushback on one facet of the issue by House Public Policy Committee Chairman Ben Smaltz). Under HEA 1015, the following structure for legalized sports betting will be implemented in Indiana, likely beginning in September 2019:

  • Legalizes sports wagering in Indiana for persons over 21 years of age to begin on September 1, 2019.
  • Allows sports wagering to take place at any of the Indiana licensed casinos, racinos, off track betting parlors, and via mobile device.
  • Allows registration for a mobile sports betting app to take place from any mobile device, rather than requiring in-person registration at a brick and mortar location.
  • Establishes the Indiana Gaming Commission (“IGC”) as the regulatory oversight body for sports wagering.
  • Establishes a 9.5% tax rate on the adjusted gross receipts obtained by a certificate holder.
  • Establishes licensure categories for: certificate holders (licensed Indiana operators seeking to offer sports wagering); vendors (a contractor with a certificate holder that manages sports wagering operations either at the brick and mortar sports book or via mobile application); and sports wagering service providers (a contractor with a certificate holder or vendor that provides associated equipment for sports betting, services such equipment, or provides risk management, integrity services, or odds to a certificate holder or vendor).
  • Allows the IGC to determine rules for in-play sports bets and whether or not “official league data” will be required for such bets.
  • Establishes a $100,000 license fee for certificate holders, an annual fee of $50,000 for certificate holders, a $100,000 license fee for vendors, an annual fee of $50,000 for vendors, and a $10,000 license fee for a sports wagering service provider.
  • Requires all data related to sports wagering to be shared with the IGC, which may then be provided to any sports governing body by the IGC.
  • Prohibits wagering on e-sports, high school athletics and amateur sporting events, or any sporting event not approved by the IGC.
  • Requires reporting by certificate holders or vendors to the IGC and relevant sports governing bodies of any information related to certain integrity concerns related to sports betting, including abnormal betting activity.
  • Allows a certificate holder three “skins” to operate.

While the 2019 legislative session was packed with large, attention-grabbing issues involving a variety of subject matters, the omnibus gaming bill was arguably the second most controversial, and potentially important, piece of legislation passed by the General Assembly this session (with only the state budget ahead of it). Lead bill authors Senators Mark Messmer (R- Jasper) and Jon Ford (R- Terre Haute) and Representatives Matt Lehman (R- Berne) and Todd Huston (R- Fishers) were able to come to several compromises that left most industry stakeholders content, if not excited about the future of the gaming industry in Indiana. The legislation represents the willingness of a largely conservative legislature to recognize the value in gaming from the perspective of the state revenue benefits, while maintaining necessary cautions to mitigate any negative ramifications.