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Indiana lawmakers will have another chance to consider legislation to regulate internet gaming when they return to the state capitol next month for their 2023 legislative session, according to Republican Representative Ethan Manning.

Manning, who was recently named chairman of the influential House Public Policy Committee, confirmed he would file a bill to authorize interactive gaming during the next session, although he is not yet ready to disclose the specifics of the forthcoming proposal.

“The gaming industry has a tremendous impact on our state, including creating thousands of jobs and spurring economic development in our communities,” Manning told VIXIO GamblingCompliance. “I anticipate the issues regarding online casinos and iGaming to be topics discussed during the upcoming session.

“At this time, it's too early to speculate on the form any proposed legislation might take, but I will continue to have conversations with other members and stakeholders as we move forward.”

Two Indiana House members filed proposals to legalize iGaming last year, although those bills were never heard in the Public Policy Committee, while the Senate's chief iGaming proponent Senator Jon Ford ultimately did not even introduce a bill.

Indiana’s legislative session is scheduled to begin on January 9.

For several years, Indiana has topped the list of states expected to consider legalizing internet gaming.

“The groundwork for legalization in Indiana has been going on for several years so there is definitely an opportunity for iGaming to pass in 2023 or a later year,” said Brendan Bussmann, managing partner with B Global.

“However, there are other competing gaming interests that may muddy the waters up to get this across the finish line this year,” Bussmann said.

“While there is a definite case for iGaming, this should be about the merits of the opportunity and not a money grab like we may see in other states that are looking for additional revenue.”

Indiana received more than $691.4m from taxes on traditional casino gambling and sports betting in fiscal year 2022, while the Hoosier Lottery contributed $344.4m.

Currently, New Jersey, Pennsylvania, West Virginia, Delaware, Michigan and Connecticut are the only states that have legalized online casino gaming. Nevada has also approved interactive gaming, but only for online poker games.

Bussmann stressed that one of the challenges, not just in Indiana but in other states, is establishing the appropriate tax rates for online gaming. He said anything above 15 percent limits innovation and reinvestment in the market, although many states tax land-based casino gaming revenue at higher rates than that.

Besides Indiana, iGaming legislation is expected to be considered next year in New York, Illinois and Iowa, according to Howard Glaser, global head of government affairs for Las Vegas-based gaming equipment provider Light & Wonder.

In a presentation to attendees of the National Council of Legislators from Gaming States (NCLGS) meeting in Las Vegas on December 11, Glaser noted legislation could also be considered in 2023 by lawmakers in Maryland, Ohio, Colorado, Louisiana and Kansas.

In terms of Indiana, Glaser suggested the key challenges of getting an iGaming bill through the legislature are the overhang from the involving former state Republican Senator Darryl Brent Waltz and a former New Centaur casino executive, along with finding consensus with the accompanying push for iLottery legislation.

Among the reasons for optimism are strong legislative champions in Manning and Ford, and elected officials are generally open to gaming expansion with sports betting being legalized in 2019.

Glaser estimated gross gaming revenue from legal iGaming in Indiana at $723m with tax revenue of $145m, assuming a 20 percent tax rate.

New York has also emerged as a leading contender to legalize internet gaming as state Senator Joseph Addabbo Jr., a Democrat and chair of the Senate Gaming Committee, has positioned the Empire State to tackle the issue, possibly as part of New York’s 2023 state budget.

Among the challenges, however, are competing industry priorities and the anticipated licensing of three downstate commercial land-based casinos in 2023.

According to Glaser, legal iGaming in New York would produce gross gaming revenue of $2.1bn, and estimated tax revenue of $428m with a 20 percent tax.

“There are two major challenges to the forward progress of iGaming in the Empire State,” Bussmann said. “The first is that you have one of the most sought-after [casino] license processes taking place in 2023 that will largely suck the air out of the room. However, the greater challenges may be changing the paradigm on sports betting while trying to legalize iGaming.”

Analysts and gaming industry executives have claimed that New York’s 51 percent tax rate on mobile sports betting is unsustainable. Addabbo has made it clear that down the line his colleagues in the state legislature could discuss whether to tinker with the state’s tax rate, potentially as part of a broader discussion on internet gambling.

“You have a state that is drunk on sports-betting tax revenue that from the beginning has been unsustainable and I’m not sure the states want to say, ‘let’s lower that to get a piece of the other pie,’” Bussmann said. “States that drive gaming because of tax revenue and not economic development want both pieces of the pie because it's all about the revenue.”

In terms of why legalization of iGaming has taken so much longer than sports betting, Bussmann said it is largely because online gaming is conceptually different for legislators.

“Sports betting is a common conversation; it’s part of the sports experience and what we consume,” he said. “Putting a gaming device in someone’s house is a different argument.”

Among the key issues that need to be addressed with legislators is responsible gaming, fears of cannibalization, giving small operators an ability to compete, sizing of the black market and estimated gross gaming revenue and tax revenue projections, according to Glaser’s NCLGS presentation.

Bussmann added that the federal government has handed out significant stimulus funds over the last two years which caused states to be flush with money.

But once those dollars start running out, he said, “legislators will look to other sources of revenue.”