State wins as gamblers lose in video lottery in South Dakota

KELOLAND.com Original

SIOUX FALLS, S.D. (KELO) — When a player gambles and loses in video lottery, the state of South Dakota gets a win as it receives some of those losses.

The $90.6 million lost in privately operated video lottery gaming machines from July through October translates to about a $136 loss for every South Dakotan 18 and older.

It would also be as if every South Dakota resident spent $102 at a video gaming machine. The figures are based on the 2019 population estimate of 884,659 from the U.S. Census Bureau.

The state gets 49.5% of that lost money as revenue.

The South Dakota Lottery Commission said this week the state was on pace for a record $131.1 million share of lottery money by June 30, 2021. The state government gest 49.5% of the total video lottery revenue.

Who could be playing the video lottery in South Dakota?

“Numerous studies conducted in a wide range of jurisdictions show that frequent or “heavy” lottery players closely resemble the overall population of that state or province,” according to the North American Association of State and Provincial Lotteries.

Various studies and research show that the poor are disproportionately impacted by gambling.

An April 2016 Blinken Report said that “gambling revenues come largely from low and moderate income households, whose incomes have declined (or not grown) in real terms along with their spending.” The report through the Nelson A. Rockefeller Institute of Government was on “State Revenues From Gambling. Short-Term Relief, Long-Term Disappointment.”

“A developing body of evidence suggests that problem gambling prevalence rates are higher in populations experiencing poverty when compared to the general population. The temporal order of poverty and problem gambling remains unclear although some research suggests problem gambling precedes poverty,” a report from the Gambling Research Exchange of Ontario (Canada) said.

Groups that are in higher risk of a gambling problem when compared to the rest of the population are indigenous peoples, the poor and low income, veterans, older adults, those with substance abuse or mental health issues, males, young adults, African Americans, those living in disadvantaged neighborhoods and the homeless, according to the Gambling Research Exchange of Ontario (Canada).

Various studies show that in the U.S., the lowest wage earners spend a larger percentage of their annual income on gambling, alcohol, tobacco and lottery tickets. A 2019 Bankrate survey showed that playing the lottery, drinking and smoking was more costly for millennials than for Gen Xers and Baby Boomers.

But the North American Association of State and Provincial Lotteries, said those of lower income will also spend a larger share of their income on groceries and other items.

An estimated 1.4% of adults in South Dakota have a gambling problem, according to a U.S. Census bureau survey used in a report from the National Council on Problem Gambling and Association of Problem Gambling.

South Dakota established its video lottery in 1989 but the relationship between the public and the video lottery has been somewhat uneasy.

In 1992, the state voted 63% to 37% to keep the video lottery. On June 22, 1994, the South Dakota Supreme Court ruled that video lottery was unconstitutional. The public passed the Legislature-approved amendment to the state constitution to allow video lottery in 1994. It passed 53% to 47%, less than the vote to keep it in 1992.

Voters decided the fate of the video lottery two more times. A vote to outlaw it failed by 54% to 46% in 2000. Another measure to repeal it failed by 67% to 33% in 2006.

The votes of support for the video lottery meant the state retained a key source of revenue. Revenue from video lottery has been the second largest source of income to the general fund since 1992, surpassed only by the sales and use tax, according to the lottery commission.

The state’s fiscal year 2020 budget included $126,020,257 in lottery receipts. It was the second largest source of revenue in that budget at 7.4% of the general fund budget revenue.

There are plenty of places to play video lottery in South Dakota.

The Online Casinos United States website describes the environment like this: “(There are) slot machines in bars and gas stations in towns of all sizes throughout the state. Sioux Falls and Rapid City, the state’s two largest cities, are inundated with video lottery casinos.”

South Dakota has about 9,100 video lottery machines at 1,324 retailers in at least 235 towns and cities in a state with 75,811 square miles.

In 2019, Wallethub listed the state right behind top ranked Nevada in terms of gambling friendliness.

But South Dakota was the big winner over Nevada in September, according to the University of Nevada of Las Vegas Center for Gaming Research. Overall gambling revenue, including casino revenue, was up by 12% in September. Nevada had a 22% decrease.

Only Pennsylvania (.27%), Maryland, (1.04%), New Jersey (4%), and Ohio (6.15%) had increases besides South Dakota.

Copyright 2021 Nexstar Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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