Two Deadwood casinos agree to penalties

Capitol News Bureau

PIERRE, S.D. (KELO) — The South Dakota Commission on Gaming will decide Wednesday whether to accept financial penalties against two Deadwood gambling casinos for violating state laws.

The managing partner for the Silverado Franklin and a lawyer representing the business that owns Hickok’s have admitted the wrong-doing, in writing, to the commission’s executive secretary, Susan Christian.

The commission could reject the result of either informal consultation and conduct a hearing.

Silverado Franklin agreed to pay $2,500 for failing to stop an underage person from playing a Wheel of Fortune slot machine three times in a five-minute span on August 1. An employee wasn’t in full view and control of the slot machine at the time.

State law says a person must be at least age 21 to play in a Deadwood casino. A violation is a Class 1 misdemeanor punishable by a fine up to $2,000 and one year in county jail. The law also says a violation can be reason for revoking the casino’s license.

Another state law requires a casino have a licensed employee at least age 21 “in full view and control” of any gaming.

Super G Investment owns the Silverado Franklin. The casino’s managing partner, Tom Rensch, said in a letter to the commission that the Silverado Franklin intends to hire more personnel and to have a floor supervisor on-site at all times.

Wrote Rensch, “On the night in question, our video surveillance discloses that a 20-year-old female, in the company of her parents, pulled the level or pushed the button on a Wheel of Fortune slot machine 3 times. Her parents can be seen encouraging her to pull the lever or push the button, in spite of the clear warnings affixed to the machine that says, ‘Must be 21 to play.’ It just happened that our supervisor that evening was not in the room at the time.”

Rensch continued, “Silverado Franklin takes its responsibility to prevent underage gaming very seriously. In the past we have caught underaged players and self-reported. Unfortunately, on this particular evening, this particular young lady with the encouragement of her parents, slipped through our supervision efforts.”

On the Hickok’s matter, the casino’s new owner, DHIH LLC, agreed to pay a $500 penalty. DHIH received a payment from Deadwood Legacy Holdings of $259,200 in December 2020 for a 16% share of DHIH. The agreement called for Deadwood Legacy to operate Hickok’s.

The complaint said the sale occurred prior to the Gaming Commission approving the gaming contract between the two companies and before Deadwood Legacy had been licensed by the commission, as required by state law.

Tim Rutjes of Yankton organized DHIH, while Deadwood Legacy Holdings was formed by Tim Conrad and Marc Oswald as a real estate investment, development and management company, with an emphasis in gaming casinos.

Sheila Woodward, a lawyer for DHIH, said in an answer to the complaint that DHIH didn’t intentionally commit a violation but the facts as stated were true. Woodward said that when DHIH and Deadwood Legacy entered into the agreement, “DHIH did not believe that was a gaming contract because Deadwood Legacy was not given any control over the gaming operation. DHIH now understands that was in error.”

The lawyer continued, “From now on, anytime DHIH brings in new partners who own more than a five percent interest in the entity, it will submit those proposed contracts to the Commission prior to executing them.”

Woodward said there was another reason DHIH didn’t understand that it needed to submit the agreement for commission approval: The intent of DHIH and Deadwood Legacy was that Deadwood Legacy’s investment in DHIH was contingent on the commission granting Deadwood Legacy a gaming license.

“There were multiple contingencies in the contract that would have rendered the contract void if not fulfilled. These contingencies, including securing an acceptable franchise agreement, could never have occurred unless and until Deadwood Legacy was granted a gaming license. Thus, DHIH believed the Commission would have the opportunity to void the contract by not approving Deadwood Legacy’s gaming license,” Woodward said.

The lawyer said DHIH going forward will ensure all proposed gaming contracts are approved before they are executed. “If there is ever any doubt as to whether a gaming contract exists or whether prior approval is needed, DHIH will error on the side of caution, will reach out to the Commission for guidance, and will retain legal counsel to review proposed contracts to ensure proper compliance,” Woodward said.

The commission Wednesday will also review a $300 penalty that Sean Gray agreed to pay for failing while a pit boss at Cadillac Jack’s to discard a blackjack card that had been seen face-up while still in the blackjack shoe.

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