Officials are promoting Gary's proximity to Chicago, access to available land and Indiana's "pro-business environment."
Gary's mayor posted an ad in the New York Times Monday that addressed Amazon Chief Executive Officer Jeff Bezos.
The mayors of Indianapolis and Fishers joined with business leaders to throw their collective hats into the ring.
Indianapolis could meet Amazon's real estate, infrastructure and demographic criteria, analysts say, but will have trouble with the workforce requirements.
The state's battle to collect online sales tax from non-resident businesses will more likely play out in Congress than in the courts, says one economist.
The investment is part of Amazon Web Services' plan to use renewable energy for 100 percent of its services.
The online retailer will hire 80,000 seasonal employees around the country.
Amazon is establishing a physical presence on the Purdue University campus in an attempt to reduce textbook prices.
Including Indianapolis, Amazon now offers Sunday deliveries in 17 cities.
In a 2012 settlement, Amazon agreed to start collecting sales taxes on items shipped to Indiana beginning this year.