The online betting situation in Indiana has its good and bad points. On the positive side, Indiana state laws allow residents to participate in online horse wagering, fantasy sports betting and real money skill games. On the negative side, it is actually a crime to participate in unlawful gambling and sports betting over the internet.
It is frequently misreported on the internet that Indiana law makes it a Level 6 Felony* to participate in unlicensed poker or casino games. This is not true. Chapter 5, Article 45, Title 35 of the Indiana code specifies it is a Class B misdemeanor with a maximum punishment of 180 days in prison and a fine of up to $1,000. The only time gambling is considered a felony is if someone is in the business of gambling such as running an illegal bookmaking operation.
Although this law is clearly unfavorable, it’s not as bad as commonly reported. The other thing to keep in mind is nobody has ever been charged for the crime of online gambling in Indiana. There’s just no effective enforcement mechanism.
These laws set the stage for online betting in Indiana. Fortunately, some forms of internet wagering are permitted in the state. Below is a list of sites that are headquartered in the United States and authorized to offer their services to Indiana residents.
*The original code classified the business of gambling as a “Class D” felony. Major changes were made to the criminal code in 2014 and felonies are now classed as level 1 through 6, with 6 being the most minor. Despite inaccurate reporting on other websites, it is not and never has been a felony of any type to participate in online gambling.
Legal Betting Sites
Horse and Greyhound Betting:
Games of Skill:
Indiana does not make it a crime to participate at any of the above gambling sites. You can sign up and play for real money at these sites with absolutely no legal risk. A combination of state and federal laws exempt these sites from all anti-gambling statutes.
One of the nice things about playing at any of these websites (other than the fact that they are 100% legal) is that you can easily deposit and withdraw with all major credit cards, PayPal and electronic banking transfers. Because there are no banking restrictions on these forms of gambling, financial institutions are free to process transactions to and from all of these sites.
How Are These Sites Legal?
Horse racing and fantasy sports are both legal thanks to carve-outs in the Unlawful Internet Gambling Enforcement Act (UIGEA). The text of the UIGEA specifically mentions both forms of betting and declares both exempt from the law. Each state has the option to prohibit one or both forms of gambling but Indiana has opted to leave it be.
Skill games such as those found at WorldWinner.com have zero element of luck and are therefore clearly defined as NOT gambling. Once again, these types of real money games are only banned in certain states.
Indiana could ban any of the above forms of betting at any time, but lawmakers have shown no desire to do so. So that is the basic reason why some betting sites are still legal in Indiana. Hopefully the state eventually comes around and legalizes other forms of gambling.
Online Casinos and Poker Rooms
Online casinos and poker sites were banned at the federal level up until 2011 due to the Wire Act of 1961 (full text). Up until 2011, the Wire Act prevented individual states from legalizing internet casino games or poker. This all changed in late 2011 when the Department of Justice revised its stance on how it interprets the Wire Act.
A September 2011 ruling found that the Wire Act only applies to online sports betting and no other form of betting. This paved the way for individual states to legalize and regulate internet casinos and poker rooms. Shortly after, Nevada, New Jersey and Delaware did just that. More states are in the process of passing their own legislation to legalize online gaming.
Unfortunately, Indiana has made no such move to expand the online betting options available to residents. Not a single bill has been introduced to this date. Analysts around the country consider Indiana to be unlikely to change its stance any time soon.
The longshot potential for change comes amid declining revenues among Indiana’s riverboat and racetrack casinos (racinos). Lawmakers refuse to commit to anything at this time, but have said they are willing to consider expanding the legal options in the state to make Indiana more competitive with neighboring states.
Initially, these changes will probably come in the form of new laws that allow racinos to spread table games or certain groups to build land-based casino. Failing that, Indiana could conceivably look towards the internet to make up for lost revenue in its brick-and-mortar sector. This is quite a longshot, but there have been rumors (more like rumors of rumors) that lawmakers have at least used the word “internet” in describing possible solutions.
It will most likely be several years before anything comes of all this. Legislation moves slowly in Indiana and we would have to wait for legislators to consider expanding their land-based options before they look to other avenues such as online gaming. As always, we will cross our fingers and patiently wait for good news.
Indiana’s chances for legal online casinos and poker sites improved after Governor Mike Pence was selected by Donald Trump as his Vice President. While serving as Governor of Indiana, Mike Pence had expressed support of the Restoration of America’s Wire Act (RAWA) that would have criminalized all online gambling across the nation – including in states such as New Jersey that had legalized online gambling.
With Pence out of the picture in Indiana, the state’s chances of passing pro-gaming legislation increase. However, no legislation has been introduced since Pence left the Indiana governorship.
Sports Betting in Indiana
Legal sports betting is beginning to look like an increasingly realistic outcome in Indiana. In 2018, state lawmakers introduced a bill seeking to legalize sports betting if the federal prohibition on sports betting is ever lifted. At the time the bill was introduced, New Jersey was in the middle of a Supreme Court battle fighting to repeal the Professional and Amateur Sports Protection Act (PASPA).
PASPA is the federal law that until 2018 prohibited all states except Nevada from legalizing single-game sports betting (read more here). In recent years, New Jersey’s governor and citizens alike have expressed an interest in legalizing sports betting. This led to Governor Chris Christie initiating what would become a years-long legal battle to have PASPA ruled unconstitutional.
New Jersey ultimately prevailed in its challenge to the constitutionality of PASPA. In May of 2018, the Supreme Court struck down PASPA to end the federal prohibition of sports betting. This outcome has given that bill a major boost as the biggest legal hurdle to sports betting is now gone.
The bill introduced in Indiana states that if New Jersey wins its case or if PASPA is amended or repealed via any method, the Indiana Gaming Commission must authorize sports betting within 90 days. Licensed riverboat casinos, racinos and their satellite facilities would be given the option to apply for a license to offer sports betting to customers age 21 or over. Now that PASPA is dead, the bill could bring sports betting to Indiana quickly if it is passed.
Indiana sports betting licenses will cost at least $500,000 and only permitted gambling operators would be allowed to apply. The 2018 bill does not authorize online sports betting, but we can nevertheless consider this a positive development. If this bill passes, it will significantly increase the likelihood of online sports betting following at some point.
One potential problem area is the inclusion of a sports integrity fee in the House version of the bill. This fee calls for licensed sports betting operators to pay 1% of total betting handle to the major sports leagues in order to assist the leagues in protecting the integrity of their games and to compensate them for allowing sportsbooks to profit off their games.
Chapter 9 Section 3 in the bill lays it out as follows:
A sports wagering operator shall remit to a sports governing body that has provided notice to the commission under section 2 of this chapter an integrity fee of one percent (1%) of the amount wagered on the sports governing body’s sporting events. The sports wagering operator shall remit integrity fees to the sports governing body at least once per calendar quarter.
A 1% tax on betting handle is significant because sports betting operators typically pay out about 95% of betting handle back to customers in the form of winnings, keeping just 5% for themselves to pay operating costs, pay employees and earn a profit. A 1% tax on total betting handle works out to a tax on net revenues in the range of 20%.
The sports leagues insist such an integrity fee is necessary and just, but there has been pushback from lawmakers and pundits alike who believe it is more of a money grab than anything else. The American Gaming Association released a statement that said in part:
“While we applaud Representative Morrison’s efforts to bring legal, transparent sports betting to Indiana, handing sports leagues 20 percent of what’s left over after winnings are paid out, undercuts its economic viability. Doing so will ensure the illegal market continues to thrive in the state, and gut the tax revenues available to fund essential public services. We believe Indiana taxpayers deserve better.”
Fantasy Sports Betting
Indiana legalized daily fantasy sports in 2016 with Senate Bill 339 (full text). Governor Mike Pence signed the bill into law on March 24th, 2016 and paved the way for the likes of FanDuel and DraftKings to apply for licenses and host legal fantasy contests for state residents.
Fantasy sites operated in Indiana prior to the passage of the bill, but their legal status at the time was questionable. Lawmakers finally addressed the issue with a piece of legislation that would later become known as SB 339. That law requires operators to apply for a license, pay a licensing fee and adhere to a standard of conduct designed to protect the integrity of sports, to protect the customers of fantasy sites and to protect the vulnerable from risking too much money.
Operators are required to pay a fee of $50,000 to $75,000, hold player funds in segregated accounts, prevent employees from sharing confidential information, prevent employees from participating in paid contests with a prize greater than $5 and to prevent athletes and anyone else involved in actual sporting contests from competing in contests in which the winning outcome derives from events that those people could possibly effect. For example, Andrew Luck would be prohibited from participating in any fantasy football contests.