The governor of Indiana is poised to enact a "religious freedom" law, which opponents say will give state businesses a licence to discriminate against gay and lesbian customers.
Governor Mike Pence is expected to sign the bill this week amid protests.
Supporters say the bill prevents the state from forcing people to provide services contrary to their religion.
Similar bills are being considered across the US as court rulings have made gay marriage legal in more states.
Demonstrations supporting both sides have drawn hundreds of people to Indianapolis, Indiana's state capital and largest city, in recent weeks.
On Tuesday, Indianapolis's biggest convention, Gen Con, said that the gathering of gamers would leave the state if Mr Pence signed the bill into law.
"Legislation that could allow for refusal of service or discrimination against our attendees will have a direct negative impact on the state's economy," the organizers wrote.
The governor of Arizona vetoed a similar bill last year after intense pressure from major US companies like Apple and American Airlines.
"No one in this general assembly is advocating a bill that would allow people to discriminate,'' Indiana lawmaker Jud McMillin told the Associated Press. "Everybody wants the opportunity for people to practice the rights they're supposed to have in this country."
Sponsors of the bill say it is closely modelled on a federal religious freedom law passed in 1993 and that 19 other states already have similar laws.
National gay rights groups say the Indiana bill is the most sweeping of several similar proposals introduced this year in more than a dozen states.
"What these politicians are peddling as 'religious liberty' is not real religious liberty," said Rea Carey, executive director of the National LGBTQ Task Force Action Fund. "This law is an outright recipe for discrimination and persecution."
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