State-Level Gambling Legality in Indiana
Indiana’s gambling laws are rooted in history, starting with the state constitution of 1851, which banned gambling outright. Over the decades, public attitudes shifted, prompting gradual reforms. In 1988, a constitutional amendment created the Hoosier Lottery, followed by pari-mutuel horse racing betting in 1989. Just a few years later, in 1993, the state legalized casinos, ushering in an era of riverboat gambling that has since evolved into fully land-based properties.
The most recent major milestone came in 2019, when sports betting was legalized both at physical sportsbooks and online, making Indiana one of the early adopters in the U.S. Today, the gambling scene offers a broad range of legal options, but online casinos and poker remain strictly off-limits.
Indiana Code on Gambling
Indiana Code 35-45-5-1 et seq. lays the legal foundation. It defines gambling, gambling devices, and unlawful activities. Key points include:
- IC 35-45-5-2: Unlawful gambling is a Class B misdemeanor.
- IC 35-45-5-3: Professional gambling or bookmaking = Class D felony.
- IC 35-45-5-3.5: Possessing or operating electronic gambling devices can result in infractions or felonies.
- IC 35-45-5-4: Promoting gambling by owning devices or transmitting information = felony.
For operators, knowingly running illegal online gambling carries harsher consequences than casual participation. Players face up to 180 days in jail and $1,000 fines. Operators risk felony convictions.
Gambling Taxes in Indiana
Indiana collects gambling revenue through several channels:
- Casinos: Pay taxes on adjusted gross revenue, generally around 15–40% depending on tiers.
- Sports betting: Taxed at 9.5% of adjusted gross receipts.
- Lottery: Revenue flows to the Build Indiana Fund, supporting state infrastructure and pensions.
- Horse racing/pari-mutuel betting: Overseen by the Horse Racing Commission, taxed at lower rates.
For players, gambling winnings are taxable income at both federal and state levels. The Indiana Department of Revenue requires reporting, with state tax set at 3.23% flat rate. Winnings above IRS thresholds trigger automatic W-2G forms from operators.