Voters will decide the future of sports gambling in South Dakota on Tuesday.
The United States Supreme Court wiped away federal prohibitions on betting in 2018, but the state Constitution must be ratified for South Dakotans to lay down their bets, which is what Constitution Amendment B offers inside city limits of Deadwood and reservation casinos.
Eighteen states and Washington, D.C., have already legalized sports wagering, including seven in the last eight months. Meanwhile, four more states have allowed limited sports betting, with North Carolina and Washington allowing wagers at tribal casinos.
Those pushing for the bill concede it likely will not bring a large stream of cash flow to the state, but it would fall in line with surrounding states that have approved or are considering sports betting.
Sports betting is legal in Colorado, Illinois, Indiana, Iowa and Montana, while Nebraska has a bill on the table for this year’s election. Meanwhile, a sports wagering bill did not reach the ballot in Wyoming and bills have stalled in Kansas, Minnesota and North Dakota.
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“Studies show that people prefer to bet legally, and right now in South Dakota, we’re forcing them to bet illegally,” said Mike Rodman, executive director of Deadwood Gaming Association. “We know that South Dakotans want legal sports wagering because as soon as Iowa had legal sports betting, there was news about people from the eastern side of the state driving over the border to place sports wagers.”
In 1988, limited-stakes gambling was legalized in Deadwood through the same process, with 40% of revenue being distributed to the state tourism promotion fund and 10% to Lawrence County, which pays the South Dakota Gaming Commission.
In addition, $100,000 is given to the Historical Preservation Loan and Grant Fund. Any remaining funds are given to the City of Deadwood for the Historic Restoration and Preservation Fund.
The American Gaming Association reports that South Dakota has created $100 million in gaming revenue each year since 2008, with a 9% tax on commercial casino revenue and $2,000 device tax on each gaming unit. According to Reason Foundation, Iowa has raised $1.9 million in tax revenue since sports betting was legalized in August 2019.
Fiscal analysis from the South Dakota Legislative Research Council estimates $2 million in revenue and $185,000 in taxes from sports betting. The American Gaming Association estimated $6.8 million, but also projected it could create a $22 million impact on the rest of the Deadwood gaming industry.
However, State House Speaker Steven Haugaard believes the revenue streamed into the state is not worth the risks that come with gambling.
“If I have a sales tax on tangible items, that’s kind of innocuous,” Haugaard said. “People might not like getting taxed, but they’re not going to suffer adverse effects from that. … If the state needs revenue, they should tax people accordingly, impose fees or whatever they need to do to accomplish the appropriate state purpose.”
If approved, lawmakers would determine the specifics of sports betting in the state, and Rodman says Deadwood would recommend following American Gaming Association guidelines, which prohibit betting on high school sports and allow a ban on in-state collegiate sports betting. Haugaard, however, feels that betting tarnishes the purity of sports.
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He also believes the amendment could bring concerns with addiction. A WalletHub study ranked South Dakota as the second-most gambling addicted state in the country behind Nevada. South Dakota is tied with Nevada in most casinos per capita and his third behind Nevada and Oklahoma in gaming machines per capita. The same study ranked South Dakota sixth in treating gambling addictions.
“People are already predisposed to the idea that sports are an attractive thing,” Haugaard said. “You’ve got fantasy football and all these other things that people dream about, plot and plan for. The online use could be easy access and it’s not the message we want to send to young people. What we ought to do in regards to education is follow the Constitution and make sure people are moral and intelligent.”
Even if the bill passes in the election, Rodman does not anticipate new laws drawn up and ratified prior to July 1, 2021. Still, an addition to the gaming experience could help statewide casinos rebound from the impact of the COVID-19 pandemic.
When Deadwood submitted its yearly relicensing paperwork, it licensed 400 fewer devices, which Rodman said is a 15% decrease.
“It’s going to take some time to recover from the pandemic and sports wagering would certainly be a shot in the arm to recover,” Rodman said. “We had a strong September, but we were still down 6.8% to date. Hotel revenues are down 27% to date.”
