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In wake of crime surge, lottery commission pauses on security study for video lottery establishments

PIERRE--Members of the South Dakota Lottery Commission want their staff to step back from a security study for video lottery establishments. The objections raised Thursday by chairman Chuck Turbiville, of Deadwood, and member Bob Hartford, of Pie...

PIERRE-Members of the South Dakota Lottery Commission want their staff to step back from a security study for video lottery establishments.

The objections raised Thursday by chairman Chuck Turbiville, of Deadwood, and member Bob Hartford, of Pierre, focused most on the possible financial impacts on businesses that have just a few machines.

The South Dakota Lottery's executive director, Norm Lingle, suggested that his staff take the coming weeks and return with a revised recommendation at the commission's next meeting Sept. 15.

Robyn Seibel, the video lottery security director, told the commission the proposal called for a review of various-sized establishments and sharing best practices.

The proposal was a one-year contract through June 2017 with Gaming Laboratories International.

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The New Jersey-based company that has been part of South Dakota's consultants for the video lottery system since its start in the late 1980s.

GLI planned to sample 50 establishments covering the various business types that host video lottery, according to Seibel.

The purpose was to identify security gaps and opportunities for improvements. The review was to cover the physical situations as well as management practices and internal security controls.

Seibel said the study was prompted by thefts and robberies. The total cost would be about $80,000 start to finish, she said.

"Nobody has done anything like this before. This would be pretty ground-breaking if we move forward with this," she said.

Seibel said video lottery establishments suffered 14 robberies and five burglaries in 2015, mostly in November and December and mostly in Rapid City, Sioux Falls and North Sioux City markets.

Turbiville commented that he is "somewhat hesitant" about "going forward with another $80,000 study."

There currently are 1,331 licensed video-lottery establishments. The terminals are privately owned and maintained. State government takes 50 percent of the net machine income. That's the money players lose.

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Turbiville said he was at the Rapid City police meeting about the situation there. He said he isn't sure what the study would deter.

"I personally think a lot of these robberies are the result of drug addiction," Turbiville said.

He explained his hesitancy. "Here again, does one size fit all?" he said. "I don't know what to expect."

Turbiville asked Lingle and deputy director Clark Hepper if the staff could bring general recommendations instead.

Hartford said he agreed with some of Turbiville's concerns. He recalled meeting with legislators in some districts last winter and concluded some business people might stop offering video lottery if there are too many regulations.

"There are huge differences between a Crown Casino in Sioux Falls and the gas station in Blunt," Hartford said. He questioned how the 50-establishment sample would be chosen.

"What happens in Ipswich and Blunt? That's my concern," Hartford said.

Seibel, flanked by Hepper, responded that it is a good idea to have a contrast between the highly populated locations.

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"There's been some that have been hit multiple times. What's going on in those places?" Seibel said. "Making those places safer is the ultimate goal."

Lingle offered to delay the contract until the next meeting, discuss the scope with GLI and perhaps make it less expensive while still achieving some of the safety objectives.

Commissioner Brent Dykstra of Fort Pierre asked whether there will be recommendations or requirements.

Hepper said the RFP refers to "best practices" and the industry doesn't want legislative requirements to result from the study.

Turbiville recommended the commission follow Lingle's offer and see if there are approaches that don't burden smaller casinos.

"I think it's something we need to work with," Turbiville said. "Maybe a smaller study. Maybe an in-house study. Whatever you would recommend," Turbiville said.

Dykstra said he wants to hear from the establishment owners and managers. "I think that's important. Part of that discussion should include the establishments for sure," Dykstra said.

James Maida, the founder of GLI, was in audience. He spoke to the commission.

"We think one size never fits all. You're as different as every other state," he said.

Maida said the idea for forming GLI came in 1988 during a South Dakota Lottery meeting at its first headquarters in the St. Charles Hotel building.

"South Dakota was our first client," he said. Today the company has 1,000 personnel and 20 offices worldwide.

"You are the blueprint for every video lottery that came after you," he said.

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