Casinos Not Cashing In

It took a hit more than two years ago but is South Dakota's video lottery making a come back?  State economists are expecting an increase in video lottery revenue in the next year.

"It's our second largest source to the state general fund," Jim Terwilliger with the South Dakota Bureau of Finance and Management said.

But that income hasn't been the jackpot for the state that it once was. More than five years ago, video lottery hit a peak of $110 million, but in 2011 it dropped off.

"I think the smoking ban definitely hurt us; there's no question about it,” Don Rose owner of Shenanigans Pub said. “The smoking ban hurt us and the Grand Falls Casino.  You can still smoke over there.  Some people, the true gamblers, are going across the road 15 miles away; they're going over there.”

Rose has had video lottery machines in his bar since the day the state allowed the games. He says the one-two punch of the smoking ban and the opening of the Grand Falls Casino in Iowa led to a 25 percent decrease in his video lottery revenues.

"Everybody said they are still down; they haven't come back," Rose said.

In the years following the smoking ban, video lottery dropped about 20 percent statewide from its peak.

Since then, the state has taken steps to try to attract players back to the games. New line games, which are similar to regular slot machines, have been introduced in the state. At a recent budget briefing, state economists say they expect the first increase in video lottery revenues since the smoking ban.

"The big one being the 49.5 percent of video lottery net machine income, which I am projecting a five percent growth in '13 and '14," Terwilliger said.

"Predictions are predictions.  They're hoping that they get five percent increase.  I'm telling you right now, we're down here. We have been down since the smoking ban went into plan and we haven't bounced back," Rose said.

Just in the past few weeks, the South Dakota legislature has made even more attempts to boost the bottom line. Lawmakers have passed, and the governor has signed, a bill allowing pennies to be played in video lottery machines and $1,000 prizes to be paid out. As far as if it will help...

"It won't hurt,” Rose said. “I don't know how much it's going to help, but again, it might stabilize the players we've lost over the course of the smoking ban. It might bring some of them back but whether or not that's going to be a big increase, I don't know."

The state concedes that while it's projecting an increase, video lottery isn't what it used to be.

"We peaked at about $110 million in video lottery and even in fiscal year '14 with some growth, we're still almost $15 million off our peak," Terwilliger said.

Rose says the attempts to help out the video lottery industry and the state budget haven't been enough to make up for the losses.

"It certainly isn't coming back to the days you want it to be at when it was pretty good for the State of South Dakota," Rose said.

And that's why casino owners aren't calling the projected revenues a comeback by any means.