Sports-wagering might be a small way to help cover South Dakota’s constant cash shortage

Capitol News Bureau

PIERRE, S.D. (KELO) — No one from the South Dakota governor’s office nor the state attorney general’s office spoke a word at a public hearing Friday, when a panel of lawmakers considered asking voters whether they want sports wagering allowed in Deadwood.

The reversal by Governor Kristi Noem was notable on several levels, after her administration actively worked last year to keep the Legislature from putting the sports-betting measure on South Dakota’s ballot.

What is taking shape in the Capitol is a drive down another path to attract gamblers’ interest in Deadwood, by possibly making sports wagering available throughout South Dakota.

At the same time sports-wagering would create a new source of revenue for a cash-hungry state government that, for the past decade, has been sweeping the corners of every agency and department for every spare dollar.

Here is how the pieces could fit together:

Start with Roger Tellinghuisen. He is the lobbyist for the Deadwood Gaming Association. Back in 1986 Tellinghuisen, the state’s attorney for Lawrence County whose communities include Deadwood, won the Republican nomination for attorney general over Michael Jackley and then won the general election.

In 1986, South Dakota voters amended the state constitution to allow for the creation of a state lottery. Deadwood backers meanwhile had formed their “You Bet” committee that convinced South Dakota voters in the 1988 election to give the city the exclusive right to offer legal gambling on slot machines and card games.

The federal government was considering tribal gambling at the same time. The Deadwood gambling amendment meant tribal governments in South Dakota could offer gambling too on their reservations. Few South Dakotans seemed to grasp this in 1988 as they voted on the Deadwood question.

Tellinghuisen didn’t seek a second term as attorney general in 1990. He instead transitioned into lobbying legislators on a variety of issues, with Deadwood gaming one of his employers.

Now jump back to the present. Last week, lawmakers gave final approval to reducing the state Lottery Commission to five members. It currently has seven seats, but Governor Noem has filled only five.

Lottery director Norm Lingle has told lawmakers that the state Commission on Gaming has five members and seems to function well.

One of Noem’s ‘Four Pillars of Protection‘ promised in her 2018 campaign was to stop the growth of state government. Combining the Lottery Commission and the Gaming Commission into a single panel — they’re both under the state Department of Revenue already — would be a promise kept that she could promote at campaign appearances if she runs for a second term as governor in 2022.

Another Noem promise was to veto tax increases. State government’s proceeds from Deadwood gambling are flat, but the state lottery’s revenue, especially from video gambling, has steadily grown in recent years. Sports wagering could be a way to bring in more money while keeping that promise.

Video lottery had taken a significant hit after South Dakota voters approved a statewide ban against smoking tobacco inside public places in 2010, but new types of line-up games have fueled revenue growth of late, with video lottery generating record revenue in 2019. Video lottery is state government’s second largest source of general revenue, after the 4.5 percent sales and use tax.

When voters approved Deadwood’s gambling in 1988, South Dakota was one of only a few places in the nation to offer it. The three decades since have seen legal gambling spread throughout the nation, because voters in other states allowed it.

Much of it occurs at tribal casinos under the federal Indian Gaming Regulatory Act that Congress passed in October 1988. Eight of nine tribal governments with land in South Dakota run casinos under compacts signed by their presidents or chairmen and South Dakota’s governors.

Altogether that’s meant Deadwood no longer stands out.

The telephone is now a tool that nearly every adult in South Dakota keeps handy. That extends into the gambling world too. For example, every establishment that offers video lottery is directly connected to a central system that the South Dakota Lottery monitors daily.

And the Gaming Commission oversees what’s known as simulcast betting, where gamblers go to a spot to legally bet on horse and dog races that occur outside South Dakota.

Noem refused last year to continue state government’s decades-old subsidy of horse racing at the tracks in Fort Pierre and Aberdeen, where gamblers could lay bets in person. The Legislature agreed with cutting off the state money, and the spring weeks of races weren’t scheduled.

One of the points mentioned prominently to the Senate Local Government Committee during the hearing Friday was the potential for a phone app that would allow people to bet on sports even if the bettors weren’t in Deadwood.

There’s debate whether that would be legal under U.S. law. But U.S. gamblers already illegally bet by phone or computer at off-shore sites.

Another idea Friday was a potential linkage between Deadwood casinos and the hundreds of establishments where people can already play video lottery. Tellinghuisen told the committee that some in Deadwood would want statewide betting allowed.

The Legislature would decide the technical questions next year, if the Deadwood measure gets on the ballot this year and voters approve it.

The governor, whose drop in popularity of late has made her one of the nation’s 10 least-liked chief executives, laid out a bare-bones budget plan in December. She didn’t recommend any across-the-board raises for teachers, Medicaid providers or state government employees.

Many legislators have been working since then to find enough money to give a raise of at least one or two percent. State law says teachers are supposed to get an increase equal to the rate of inflation, up to three percent.

So there is some difficulty in the Capitol between the governor’s office on the second floor and the House and Senate chambers on the third. Deadwood sports-wagering could be quietly promoted by its supporters as a potential part of some longer-range solution.

Meanwhile, there’s another issue that’s already qualified for the November election ballot. It would amend the state constitution to legalize recreational use of marijuana and set a 15 percent excise tax on sales. Revenue would be split between public schools and state government’s general fund.

Voters approved increases in bet limits for Deadwood in 2000 and to add roulette, keno and craps to Deadwood’s offerings in 2014. At the same time, voters repeatedly have refused to shut down video lottery. And the governor and her staff are now only monitoring, rather than actively opposing, putting a Deadwood sports-wagering measure on the ballot.

All of this together makes the ballot question South Dakotans might face in November much bigger than just whether, and where, someone could go to lay a five-dollar bet.

Copyright 2020 Nexstar Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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