New style of video lottery popular with South Dakota gamblersPIERRE — Early returns show video lottery players are leaving more money per machine per day in the new lineup games.
By: Bob Mercer, The Daily Republic
PIERRE — Early returns show video lottery players are leaving more money per machine per day in the new lineup games.
The new terminals, authorized by the South Dakota Lottery Commission last year, offer games based on matching symbols, similar to slot machines at Deadwood and tribal casinos.
The traditional games menu for video lottery has been poker, blackjack and keno. Those machines went into play at the start of video lottery in October 1989.
The new lineup games are generating $65.28 of net machine income — money left after winning are paid — per machine per day, while the old-style games are producing $50.40.
State government receives one-half of the money of the money lost by players in the privately owned machines.
“So we are seeing an impact,” Deb Reese, the state’s administrator for video lottery, told commission members Friday. She added, “Not too bad for four months.”
There are now more than 1,000 of the new terminals in the field and about 8,000 of the old-style “legacy” terminals.
The challenges have been licensing and testing new models from manufacturers and gaining acceptance from the operators who put the machines into businesses.
“It’s obvious those machines are generating on average $15 more per day. So it would behoove us to figure out some incentive to move those machines quicker,” Commissioner Dick Werner of Huron said.
Reese said the immediate focus is working with manufacturers to get their first models out of the factory doors. “Let those machines run for a while so we get some good stats on them,” she said.
State Revenue Secretary Andy Gerlach and several lottery commissioners, including chairman Kory Menken, of Dakota Dunes, said time should be spent in the coming months on devising a long-term strategy and updating the South Dakota Lottery’s business operations.
Gerlach noted the difference in attitudes that became clear in the Legislature this year toward Deadwood gambling casinos and video lottery.
Deadwood received approval for raising the bet limit to $1,000, from $100, and eliminating ownership limitations.
But lawmakers twice rejected attempts to increase the video lottery bet limit to $5, from $2, and refused to allow businesses to expand the number of video lottery terminals per establishment to 14, from 10, if the additional machines featured the new lineup games.
Gerlach told the lottery commissioner it was “disappointing” the video lottery legislation lost. He said the second lesson is that a unified effort is necessary between state government and “our industry partners” regarding video lottery.
“To me it’s a three-leg stool: the industry, the commission and the lottery,” Gerlach said.
During the legislative session, the lottery’s public position on the proposed changes was neutral. The numbers regarding the higher daily averages for the new types of machines were still taking shape and weren’t presented.
Gov. Dennis Daugaard’s administration proposed the addition of lineup games in 2011.
The expansion was a response to the sharp drop in video lottery play that coincided with the new smoking ban that voters enacted for casinos, bars and restaurants with alcohol licenses.
Through the first 37 weeks of state government’s current budget year, net machine income to the machine operators and the state treasury totaled $125.3 million. That was down nearly 11 percent year to date from the $140.7 million at the similar point in 2011.
Video lottery generated $95.1 million for state government in the 2011 budget year that ended last June 30. That was an 11 percent drop from $106.9 million in the previous year.
Video lottery revenue for state government peaked at nearly $112 million in the 2008 budget year. It had grown to become the second-largest source of general revenue for state government, behind only the state sales and use tax.
Getting 1,000 more of the new models into the field could equate to another $15,000 daily for the government and the operators, according to Werner.
“We’re not talking about chump change here,” he said.
The state’s lottery director, Norm Lingle, said the new machines need to get into place, and the lottery needs to get data to owners and operators, as part of determining what more can be done.
“There’s A locations, B locations and C locations. All that goes into the mixture, as they decide whether they invest in machines and where they get placed,” Lingle said.