LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
200 W. Washington St., Suite 301
Indianapolis, IN 46204
(317) 233-0696
iga.in.gov
FISCAL IMPACT STATEMENT
LS 6562 NOTE PREPARED: Dec 18, 2020
BILL NUMBER: SB 90 BILL AMENDED:
SUBJECT: Electronic Gaming in Veterans' Service Organizations.
FIRST AUTHOR: Sen. Tomes BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED: X GENERAL IMPACT: State & Local
X DEDICATED
FEDERAL
Summary of Legislation: The bill authorizes wagering on video gaming terminals in licensed
congressionally chartered veterans' service organizations. It establishes a licensing structure for participants
in video gaming. It provides funding to the Department of Veterans' Affairs for grants for veterans' services.
Effective Date: July 1, 2021.
Explanation of State Expenditures: Indiana Gaming Commission (IGC): The bill requires the IGC to
administer, enforce, and regulate a system of video gaming in Indiana. The IGC will have to set licensing
standards and conduct investigations of the licensees. The provisions in the bill would lead to additional
administrative cost for the IGC. The bill provides that the license fees would be used to pay for the cost of
investigating license applicants and license holders. However, any additional expenses would be paid from
Riverboat Wagering Tax revenue annually appropriated to the IGC for administrative purposes. HEA 1001-
2019 appropriated $3.5 M annually in FY 2020 and FY 2021 to the IGC for administrative purposes.
Grants for Veterans’ Services Fund: The bill establishes the Grants for Veterans’ Services Fund to be
administered by the Indiana Department of Veterans' Affairs. Indiana Gaming Commission will deposit the
application fee, initial license fee, and the renewal licence fee from the video lottery operations at the
licensed congressionally chartered veterans service organizations in the Grants for Veterans’ Services Fund.
The expenses of administering the fund shall be paid from money in the fund. However, the Department of
Veterans’ Affairs may not expend more than 10% of the money in the fund for administering the fund each
state fiscal year. The department may make grants from the fund to qualified entities to be used to provide
services to veterans. Money in the fund at the end of a state fiscal year does not revert to the state General
Fund.
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Penalties: The bill establishes a Class A misdemeanor and a Level 6 felony for certain violations of
provisions relating to video gaming. A Level 6 felony is punishable by a prison term ranging from 6 to 30
months, with an advisory sentence of 1 year. The sentence depends on mitigating and aggravating
circumstances. The average expenditure to house an adult offender was $21,551 annually, or $59 daily, in
FY 2020. (This does not include the cost of new construction.) If offenders can be housed in existing
facilities with no additional staff, the marginal cost for medical care, food, and clothing is approximately
$3,524 annually, or $9.66 daily, per prisoner.
Explanation of State Revenues: Wagering on video gaming terminals (VGTs) in Indiana under this bill is
estimated to:
(1) Generate initial license fee revenue from VGT operations at the veterans establishments.
(2) Generate license renewal fee revenue from VGT operations at the veterans establishments.
(3) Reduce riverboat and racino taxes due to the displacement of riverboat and racino wagering by VGT
wagering.
The bill imposes initial license fees and renewal license fees on manufacturers, distributors, operators, and
establishments involved in the VGT installation and operation. It provides that one-third of the wagering
revenue will be annually remitted to the IGC as an annual renewal fee for the establishment. It requires the
IGC to enable video gaming to commence as soon as possible after December 31, 2021. The estimates
assume that VGT operations as allowed by the bill will begin on January 1, 2022.
The first year of impact will be in FY 2022. The revenue loss to riverboat and racinos will occur
immediately, but the full impact will likely occur in FY 2023 and the years thereafter.
The estimated impact of the bill on the Grants for Veterans’ Services Fund, state General Fund, and state
dedicated funds in FY 2022, FY 2023, and FY 2024 are reported in the following table. The estimates
account for the decline in riverboat and racino taxes due to the displacement of riverboat and racino wagering
by VGT wagering.
FY 2022 FY 2023 FY 2024
Source of Impact Funds
(in $ M) (in $ M) (in $ M)
Grants for Veterans’
VGT License Fee $0.8 - $1.1 $36 - $43.2 $45.2 - $54.4
Services Fund*
Riverboat and Racino Taxes State General Fund ($3.2) - ($7.0) ($10.2) - ($24.9) ($10.4) - ($25.1)
Riverboat and Racino Taxes State Dedicated Funds ($0.1) ($0.1) ($0.1)
Grants for Veterans’ Services Fund: The initial license fee and the renewal license fee from the VGT
operations at qualified facilities will be deposited in the fund. The fund will receive revenues starting in FY
2022. The fund is estimated to receive between $0.8 M to $1.1 M in FY 2022, $36 M to $43.2 M in FY 2023,
and between $45.2 M and $54.4 M in FY 2024.
Impact on State General Fund: The bill will also result in the decline in riverboat and racino taxes due to
the displacement of riverboat and racino wagering by VGT wagering. The revenue loss in riverboat wagering
taxes, supplemental wagering taxes, and racino wagering taxes due to the displacement by VGT wagering
would lower the distributions of these revenues to the state General Fund. Based on the actual impact of VGT
operations in other casinos, and the competitive impact within Indiana, it is estimated that the adjusted gross
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receipts (AGR) at Indiana gaming facilities would decline by 1.5% to 4%. This would impact the wagering
tax and supplemental wagering tax in the same proportion. This impact could increase in future years if VGT
becomes a more favorable gaming option. It is estimated that the revenue loss would be between $3.2 M to
$7.0 M in FY 2022, $10.2 M to $24.9 M in FY 2023, and $10.4 M to $25.1 M in FY 2024. The revenue loss
will continue in the years thereafter.
Impact on Other Dedicated Funds: The decline in riverboat supplemental wagering tax due to the
displacement by VGT wagering would also impact distributions to the Mental Health Division and State Fair
Commission. The revenue loss could be about $0.1 M annually. The decline in racino AGR due to the
displacement by VGT wagering would also reduce distributions to the horse racing industry and the Breed
Funds. The revenue loss would begin in FY 2022.
Penalties: If additional court cases occur and fines are collected, revenue to both the Common School Fund
(from criminal fines) and the state General Fund (from court fees) would increase. The maximum fine for
a Class A misdemeanor is $5,000. The maximum fine for a Level 6 felony is $10,000. Additionally, the bill
permits the IGC to impose a civil penalty of up to $5,000 upon a licensee that permits a person barred from
wagering to place a wager on a VGT. It requires any civil penalties to be deposited in the state General Fund.
Other Revenue: This bill may increase the number of VGTs sold, increasing Sales Tax revenue. Sales Tax
revenue is deposited in the state General Fund and three other dedicated funds. If allowing operation of
VGTs in alcoholic beverage retail establishments increases alcohol sales, revenue from the Alcoholic
Beverage Excise Tax may increase. Alcoholic Beverage Excise Tax revenue is deposited in the state General
Fund and five other dedicated funds.
Additional Information - The bill allows VGTs to be installed in a licensed establishment. It allows up to 5
VGTs in a congressionally chartered veterans' service organization. Based on the definition of a
congressionally chartered veterans' service organization, it is estimated that about 740 locations will qualify
to install 5 VGTs within their establishments. It is estimated that the VGT operations will grow rapidly
between January 1, 2022, and June 30, 2022, and reach the full capacity allowed under the bill by June 30,
2022. At full capacity, there would be about 3,700 VGT terminals operating in about 740 establishments in
Indiana.
Because of the capacity limitation in the bill, the market is estimated to stabilize by the second year. The
level of decline in riverboat and racino taxes due to the displacement by VGT operations would be
commensurate with the growth in the VGT market.
The analysis assumes that each establishment will install the maximum allowed VGTs within their premises.
The average daily AGR per terminal in other states with similar operations is above $120. Recent trends
indicate that the gaming markets in Indiana are saturated. Consequently, the average AGR could potentially
be lower than $120 in Indiana. The estimate assumes between $100 and $120 average daily AGR per
terminal in Indiana. The annual statewide AGR for the full impact of the bill in the second year of operations
is shown as follows.
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 Second Year Number of Average Terminals AGR per Day per Annual
(FY 2023) Establishments per Establishment Terminal Statewide AGR
Low Range 740 5 $100 $135.1 M
High Range 740 5 $120 $162.1 M
The following table provides data from seven states where VGTs are operated in bars, taverns, lounges, and
other sites where access by underage persons is restricted due to retail alcohol sales. New Mexico is more
limited as VGTs are restricted to nonprofit social and fraternal organization facilities. Since the variation in
VGT activities is likely the result of state differences in population, income, and competing forms of gaming,
this variation has been taken into account in developing the estimated average daily AGR per VGT.
Avg. Number of Avg. Daily Number Terminal Annual Daily AGR
State*
Establishments of Terminals per Site AGR per Machine
Illinois 7,009 32,162 5 $1,676.0 M $143
Louisiana 1,754 13,091 8 $576.9 M $121
Montana 1,418 16,864 12 $402.1 M $65
New Mexico 40 633 15 $9.7 M $42
Oregon 2,000 11,909 6 $876.4 M $202
South Dakota 1,331 9,002 7 $207.6 M $63
West Virginia 1,303 7,162 5 $368.1 M $140
*The totals are from the available reports for a 12-month period. LSA is in the process of updating this table.
License Fees: The bill sets an initial and renewal license fee. The revenues from the license fee net of the
IGC’s cost of investigating an applicant for an establishment license will be deposited in the Grants for
Veterans’ Services Fund.
The bill requires the licenses to be renewed annually. The license fees are as follows:
(1) An initial manufacturer or distributer fee is $25,000. The renewal fee for these licensees is set
at $10,000.
(2) An initial operator fee is $15,000. The renewal fee for these licensees is set at $5,000.
(3) An initial establishment fee is $150. A renewal fee is set at $150 to be paid every 3 years.
Additionally, one-third of the annual net video gaming proceeds would be paid as the renewal fee.
The estimate does not account for potential displacement of charity gaming and lottery sales by VGT
wagering, or the impact this could have on tax and other revenue from these activities. The impact on tax
collections from these gaming sources could further offset the revenue generated by the video gaming in
Indiana.
Explanation of Local Expenditures: Penalties: If more defendants are detained in county jails prior to their
court hearings, local expenditures for jail operations may increase. A Class A misdemeanor is punishable
by up to one year in jail. The average cost per day to incarcerate a prisoner is approximately $54 based on
the per diem payments reported by U.S. Marshals to house federal prisoners in 16 county jails across Indiana
during federal FY 2017.
Explanation of Local Revenues: Riverboat and Racino Taxes: The revenue loss in riverboat wagering taxes,
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supplemental wagering taxes, and racino wagering taxes due to the displacement by VGT wagering would
lower the distributions of these revenues to the local units where the riverboats and racinos are located. The
estimated net distributions to the local units is about $0.4 M to $0.9 M in FY 2022, $1.3 M to $3.3 M in FY
2023, and $1.3 M to $3.2 M in FY 2024.
Penalties: If additional court actions occur and a guilty verdict is entered, local governments would receive
revenue from court fees. However, the amounts would likely be small.
State Agencies Affected: Indiana Gaming Commission; Division of Mental Health and Addiction; State Fair
Commission; Department of Veteran’s Affairs.
Local Agencies Affected: Trial courts, local law enforcement agencies, local units receiving riverboat and
racino taxes.
I n f o r m a t i o n S o u r c e s : L o u i s i a n a G a mi n g Co n t r o l B o a r d , A n n u a l R e p o r t s ,
http://lgcb.dps.louisiana.gov/annual_reports.html; Montana Department of Justice, Gambling Control
Division Reports; https://media.dojmt.gov/wp-content/uploads/FY17-FY18-Biennial-Report-Final-1218.pdf;
West Virginia Lottery, Annual Reports, https://wvlottery.com/news-and-info/information/financial-reports/;
New Mexico Gaming Control Division, Annual Reports, https://www.nmgcb.org/; Oregon Lottery Audited
Financial Reports, https://www.oregonlottery.org/ ; South Dakota Annual Rpeort;
https://lottery.sd.gov/about/; Indiana Gaming Commission, Annual Reports, http://www.in.gov/igc/2362.htm;
Hoosier Lottery, Annual Reports, www.hoosierlottery.com/about-us/annual-report; State Revenue Forecast,
December 20, 2019, https://www.in.gov/sba/2760.htm ; State Revenue Forecast, December 16, 2020,
https://www.in.gov/sba/2837.htm; Alcohol & Tobacco Commission, Online License Database;
http://www.in.gov/atc/2410.htm;
Fiscal Analyst: Randhir Jha, 317-232-9556.
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Statutes affected:
1. Introduced Senate Bill (S): 4-32.3-1-1, 10-17-13.5-4