Sports betting in Deadwood – You Bet!

After years of work, with gaming officials gaining both the vote of the people and then the state Legislature, sports betting in Deadwood goes live today. Pioneer photo by Jaci Conrad Pearson

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DEADWOOD — Truly a team effort, Deadwood has, as of today, officially welcomed sports betting to its gaming lineup.

Following a landmark United States Supreme Court ruling in May 2018, the legalization of sports betting was placed into the hands of individual states.  

South Dakota voters approved the action on the November 2020 ballot by a 58% to 41% margin, and the state legislature soon followed up by passing Senate Bill 44 in February.

“Deadwood started working on sports wagering in May of 2018 as soon as the US Supreme Court ruled that the ban on sports wagering was unconstitutional,” said Deadwood Gaming Association Executive Director Mike Rodman. “We tried to get the 2019 legislature to place it on the ballot and fell short by three votes in the House that year.”

Gaming industry officials then took another run at it.

“We went back in 2020 and the legislature that year put it on the November ballot,” Rodman said.  

South Dakota Gaming commissioners approved two sets of rules surrounding sports wagering over the last few months with the last finalized Wednesday.

Per SB44, Rodman explained the parameters of sports wagering.   

“It will be conducted inside the premises of a licensed gaming facility in Deadwood through wagers on sporting events placed in one of the following ways: at a betting window with a casino employee, at a kiosk, or on a mobile device,” Rodman said. “Most sports wagering bettors will probably open sports wagering accounts with an advance deposit and bets will be subtracted and their winnings deposited. You will not be able to bet on high school sporting events, South Dakota collegiate contests, and minor league sporting events.”

The first of a two-step process to develop sports wagering rules was put into place May 18, when the South Dakota Commission on Gaming adopted six rules as proposed by the Legislative Research Council that will help govern the operation of sports betting gaming establishments offering the highly anticipated betting option.

As of Wednesday, four casinos are licensed to offer the wager: Mustang Sally’s, Gold Dust, Tin Lizzie, and Cadillac Jack’s. More are anticipated to offer sports betting in the coming weeks and months, as the gaming commission approves licensure of properties and principals, as well as sports wagering service providers.

Deadwood Mayor Dave Ruth and Lawrence County Commissioner Bob Ewing, a former state senator, were expected to place the first bets at 10 a.m. today.

Preliminary numbers indicate that approximately 10 properties in Deadwood plan to offer sports wagering.

“However they may not all be ready by (today) as they wait for equipment, etcetera,” Rodman said.

According to a study by Oxford Economics conducted for the American Gaming Association, sports wagering could generate $6.1 million in direct sports wagering income and create a total of $22.1 million in overall gaming increases for South Dakota, a 15% increase, overall, with 152 additional jobs created with the advent of sports betting.

Deadwood gaming officials wanted to remain competitive in the gaming environment as more and more states are offering sports betting.

“Sports wagering will be another tool in Deadwood’s toolbox to keep us a competitive gaming destination. Deadwood needs to provide the products our customers ask us for. It will give us more marketing opportunities to promote Deadwood at times that have been historically slower for Deadwood,” Rodman said. “As the Oxford Economics study alludes, sports wagering could bring an overall increase of approximately 15% to Deadwood’s gaming numbers. We also will see additional hotel stays and food and beverage income from the addition of sports wagering.”

Currently, there are currently 23 operational jurisdictions in the United States, with South Dakota being the most recent.

“What’s important for operators is, one, giving a good environment to add this amenity,” said Brendan Bussman of Global Market Advisors, who has served as a consultant to the Deadwood Gaming Commission. “Everybody’s familiar with casino gaming, but sports betting has really seen a surge over the last three years.”

Another 10 states, including South Dakota, are in the process of getting it to market.

So what is the benefit, overall, to the consumer, casino and state for legal sports betting?

“Legal is obviously the way to go because it offers consumers the best protection,” Bussman said. “It offers the state the ability to collect taxes on that and be able to move forward in the right fashion. Illegal sports betting’s been happening and still, today, those guys don’t pay taxes, they don’t offer any consumer protections, and they’ll play games with people just to get their wagers in. That’s why it’s important to make sure that those who are wagering today and, hopefully, after (today) when this launches, are using regulated sportsbooks in South Dakota to be able to do that. And have that, know that I’m doing stuff with a legitimate operator that’s doing stuff legitimately in the United States and will treat me fairly and give me a fair shake, which is what everybody wants. Whether they’re walking into a casino to play a slot or if they’re walking in to place a sportsbet.”

Gambling in Deadwood brings in tax revenue that gets distributed across the state through the general fund and grants for historic preservation.

The state assesses a 9% tax on Deadwood gaming revenues. Casinos are also charged a $2,000 per device or table fee. From those revenues, 1% goes to the state general fund, 40% to the state Department of Tourism, 10% to Lawrence County, and 50% to the South Dakota Gaming Commission until its expenses of $1.2 million are met.  

The city of Deadwood Historic Restoration and Preservation Fund gets the first $6.8 million per calendar year plus 10% after that threshold is met.

After the threshold is met, the state general fund receives 70%, 10% is distributed to Lawrence County cities and 10% to Lawrence County school districts.

Gaming has been good for Deadwood’s economy, transforming the town with a failing infrastructure in the ‘80s into a premier tourist destination today, with $1.1 billion wagered in 2020 in the 26 gaming outlets lining the streets.

In 2014, 57% of South Dakota voters approved an amendment to the state’s constitution allowing keno, craps, and roulette be added to Deadwood’s gaming lineup. Those games were placed on the casino floors on July 1, 2015 and resulted in about 10% of the table revenue – about $10 million.

Rodman believes Deadwood would see similar gains with the addition of sports betting, as well as additional spending.

“This would result in more hotel stays, retail sales, and food and beverage sales. We see the traditionally off-season time periods positively impacted by events like the Super Bowl, March Madness, and the World Series,” Rodman said. “Deadwood needs to continue to grow as a visitor destination that has an enormous impact on the Northern Hills and all of South Dakota’s tourism industry. Betting on sporting events gives us just one more option to attract additional visitors.”

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