An Indiana legislator, State Representative Alan Morrison (R-Terre-Haute), has introduced two bills for consideration. One would legalize sports betting and the other would legalize Daily Fantasy Sports in the state.
“Gaming is something that this state has become extremely reliant upon, that revenue,” Morrison told the local Indy Star. “As it’s been trending down, it’s incumbent upon us to figure out how to fix it or to improve on what we have.”
The expanded gaming options proposed by Morrison would certainly act as a lifeline for Indiana’s declining gaming industry. However, his proposals will have to compete with more traditional “fixes” that have been talked about, including adding table games to the state’s racinos and moving the riverboat casinos onto dry land.
Sharp revenue decline
How bad is it in Indiana?
2014 will likely see gaming revenue decline for the fifth straight year. More worrisome than the year-over-year declines is the state has seen revenue fall from $450 million in 2009 down to $333 million in 2013, and perhaps falling under $300 million in 2014 when the final numbers are tallied.
The state’s gaming operators have beseeched the legislature throughout the year to do something to fix this problem. Jim Brown, the CEO of two racinos in Indiana, Hoosier Park and Indiana Grand, stated in September, “The state must provide the industry with the tools it needs to survive.”
Perhaps sports betting and DFS are those tools?
Sports betting first mover advantage
Taking a page out of New Jersey’s playbook, Morrison has introduced HB 1073, a measure that would allow Indiana’s casinos (riverboats and racinos) and off track betting locations to offer legal sports betting, if (and this is an important if) the Indiana Gaming Commission says its permissible under federal law – a clear challenge to the 1992 PASPA, which outlaws sports betting in all but four states.
Morrison concedes HB 1073 is a preemptive move, something Indiana could have on the books if New Jersey prevails in court against the NCAA and professional sports leagues. By acting now Morrison feels Indiana would gain a first movers advantage by piggybacking on New Jersey’s possible court victory.
Morrison worries that by waiting, if New Jersey prevails later this year, the Indiana legislature wouldn’t have time to act on a sports betting bill, and would therefore have to hold off until 2016 to get the ball rolling.
“If it were to (become legal) in July, let’s say, that would back us up another year before we could start the process,” Morrison stated. “So if we have it on the books… we’d be ahead of the game on that.”
DFS may be an easier sell
Morrison’s second bill, HB 1074, would allow racinos to offer Daily Fantasy Sports (DFS) wagers.
DFS is not illegal in Indiana, and Indiana residents are able to participate in DFS contests online at present. However, DFS is not explicitly legal in the state either, as Indiana doesn’t have any specific laws on the books covering the fairly new industry.
Daily Fantasy Sports ostensibly has a PASPA and UIGEA exemption as it falls under the definition of Fantasy Sports, but the burgeoning industry could see this exemption challenged down the road, and at the very least the industry can expect to eventually fall under the regulatory umbrella of state gaming commissions.
Two potential roadblocks
In addition to the difficulty gaming expansion normally faces, particularly in a red state such as Indiana, Morrison’s bills will have to deal with two potential roadblocks.
Roadblock #1: Indiana Governor Mike Pence
Indiana Governor Mike Pence does not appear to be a friend of gaming.
In October, Pence told the Indiana Business Journal, “It’s never been the intention of my administration to promote policies that either expand or contract gaming in our state.” The Governor then went on to say, “But I’m going to make it very clear to legislators that our administration will not support any expansion of gaming in the state of Indiana.”
Pence has also shown a willingness to weigh in on online gambling. In May of 2014 Pence penned a letter to the state’s federal delegation calling on them to support Sheldon Adelson’s online gambling ban.
Pence is also rumored to have ambitions for higher office, and allowing/overseeing expanded gambling is a tough sell in Republican primaries.
Based on his past comments and political aspirations, it’s unlikely the popular governor would publicly support either bill, particularly DFS expansion as it takes place online, if for no other reason than to remain consistent with his previous positions.
The best case scenario would be for Pence to remain neutral (he said his administration “would not support” gaming expansion; he did not say they would fight against it) and simply go along with the legislature’s desires when it comes to expanded gambling in the state.
The worst case scenario would be if the legislature passed one or both bills and Pence vetoed them.
Roadblock #2: The NCAA
Interestingly, the NCAA, perhaps the harshest critic of sports betting in the country, is based in Indianapolis, Indiana. It would be ironic if the state the powerful group is headquartered in was among the first to offer sports betting.
Expect the NCAA to do an awful lot of lobbying to keep this from occurring.