Indiana Lawmakers Change How Regulator Funds Enforcement Actions

March 28, 2024
The Indiana Gaming Commission, which levied the most enforcement actions of any U.S. gaming regulatory agency last year, will no longer be able to use the dollars it collects to fund further enforcement investigations under a bill signed by Republican Governor Eric Holcomb.

The Indiana Gaming Commission (IGC), which levied the most enforcement actions of any U.S. gaming regulatory agency last year, will no longer be able to use the dollars it collects to fund further enforcement investigations under a bill signed by Republican Governor Eric Holcomb.

IGC officials were reluctant to discuss the passage of Senate Bill 256, which increases state lawmaker oversight of the agency's budget.

Language to restrict the IGC's annual spending to a specific amount was included in a final version of the bill passed by lawmakers earlier this month and Holcomb signed the bill into law on March 13.

“As with any law passed by the General Assembly, the IGC will work to fully comply with the provisions of SB 256. The commission does not anticipate any negative impact upon agency operations as a result of the bill,” IGC officials said in an email to Vixio GamblingCompliance.

Under current state law, the executive branch can increase the IGC's spending authority without legislative involvement.

But beginning on July 1, the law will block the IGC's annual spending from being augmented beyond an agreed amount of just over $3m budget by any source, including through its enforcement penalties, without prior approval by the Senate Budget Committee.

The budget committee, which meets about every two months, includes four lawmakers and the state budget director.

The new law follows recent criticisms by one of the bill's authors as to the IGC's approach to the enforcement of state gaming laws against licensed gaming operators.

In total, the IGC issued 93 enforcement actions in 2023, with fines totaling more than $1.03m for violations of self-exclusion rules, underage gambling, as well as technical and occupational violations, according to Vixio's Enforcement Tracker

New Jersey issued 71 enforcement actions amounting to around $700,000 in penalties. State regulators in Ohio and Illinois also exceeded $1m in total penalties collected in 2023.

So far in 2024, the IGC has approved assessments totaling $166,250 against operators including FanDuel, ESPN BET, Caesars Entertainment, Bally’s Corp. and various suppliers for violations of the state’s gaming statutes and regulations.

Republican Senator Chris Garten, one of three authors of SB 256, has led the effort in the legislature to reform the agency, after going public before the 2024 session with his belief that there is a “culture issue” within the IGC.

In a December hearing, Garten also said he believes the commission has been too aggressive and punitive in regulating the casino industry.

“It appears that the ideology is because the casinos are profitable in Indiana, we should be able to fine them more,” Garten said during a State Budget Committee hearing on December 19.

Greg Small, IGC executive director, responded by reminding committee members that “the purpose behind our regulatory scheme is to drive compliance.”

Those efforts to drive licensee compliance led the IGC to fine Caesars $78,750 in September to settle four complaints issued against its Horseshoe-branded casinos in Hammond and Indianapolis, as well as its Southern Indiana property and Harrah's Hoosier Park.

Garten never questioned Small about the circumstances surrounding each complaint, instead choosing to focus solely on the total amount of fines issued by the IGC since 2017.

Opponents of the changes to how the IGC may fund its operations are concerned that SB 256 will make it more difficult for regulators to crack down on bad actors, even after a former state lawmaker pleaded guilty in November to a felony conspiracy charge. 

Former Republican Representative Sean Eberhart pleaded guilty to conspiracy to commit fraud for accepting a gaming company job in exchange for his legislative support of a casino reform bill. He faces a maximum of five years in prison, a $250,000 fine, and three years of supervised release.

Eberhart was a member of the House Public Policy Committee, which passed legislation in 2019 to reduce transfer fees from $100m to $20m for Spectacle Entertainment to move casinos to Terre Haute and Gary. Currently, there are 12 casinos in Indiana, with Churchill Downs set to open number 13 in Terre Haute in April.

Spectacle lost its gaming license due to financing issues, and its former CEO Rod Ratcliff was permanently banned from the industry.

The investigation begun in January 2020 also eventually forced out John Keeler, who was vice president of the Indianapolis-based gaming company. Eberhart left the General Assembly in 2022 after 16 years.

Federal prosecutors have indicated that Eberhart did not act alone, but the Indiana Capital Chronicle has reported that no other lawmakers have yet been named or charged as part of the investigation. No sentencing has been scheduled and Eberhart remains free.

Garten said his effort to impose greater legislative oversight on the IGC was “totally separate” from the investigation which eventually led to changes being filed against Eberhart.

“There are bad actors in this space,” Garten said. “They are not linked, and bad actors should be prosecuted. They should be charged. They should be fined. They should be prosecuted. I want to be very clear about that.”  

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