South Dakota Sports Betting Bill Set to Pass Into Law in Coming Days

South Dakota Sports Betting Bill Set to Pass Into Law in Coming Days article feature image
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High-population states such as New York, Georgia and Arizona have tantalized sports betting hopefuls with their respective 2021 online wagering bills, but it will be South Dakota that actually crosses the legalization finish line first this year.

South Dakota lawmakers overwhelmingly approved sportsbook legalization last week, becoming the first legislative body to pass a bill in 2021. Though it still technically needs Gov. Kristi Noem’s signature before passing into law, it appears this a mere formality.

Online sports betting legislation gained little traction this year, but South Dakota bettors will at least be able to place legal wagers — possibly before the end of 2021.

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South Dakota Sports Betting Bill

Under the bill, South Dakota bettors can wager in-person at casinos in the historic gaming city of Deadwood. Bettors will be able to wager through apps while physically within casino properties.

South Dakota tribal casinos will also be able to open retail sportsbooks. Statewide mobile wagering is not permitted.

The retail-only authorization came after South Dakota voters approved sports betting on a 2020 ballot measure even though several top lawmakers campaigned against the proposed constitutional amendment.

Several mobile 2021 wagering bills gained little traction in the legislature. South Dakota is one of the nation’s most politically conservative states and statewide online wagering proved politically unpalatable.

The amendment only permitted betting within Deadwood city limits — and, by existing law, Native American casinos — but mobile backers proponents argued online wagering was legal if the computer servers were physically within the city. Ultimately, the potential legal challenge never materialized as opponents easily shot down mobile authorization bills in committee.

Sportsbooks will be taxed 9% of gross gaming revenues, slightly below the national median average. This rate is competitive enough that it could attract all major sportsbook operating partners between the roughly two-dozen Deadwood casinos, but the relatively limited revenue potential could dissuade would-be entrants, especially smaller companies.

Iowa is the only neighboring state currently with statewide mobile wagering. North Dakota and Wyoming are considering online bills this year, and Montana has already approved retail betting. Nebraska voters approve casino gaming on a 2020 ballot measure and lawmakers are currently working through sportsbook legislation.

With its sparse population and limited retail betting options, South Dakota will likely be one of the smallest U.S. sports betting markets.

Next Steps

The Senate passed the bill 32-2 in February and the House followed, 58-8, last week. The bill is awaiting signatures from Speaker of the House Steven Haugaard and Senate President Larry Rhoden, part of the bill finalization process, before it goes to Noem’s desk. This could come as early as this week.

Once formally transmitted to the governor’s office, Noem will have five days (excluding weekends and holidays) to either sign the bill or let it pass into law without her signature. Noem initially opposed legal sports betting upon taking office in 2019, but warmed to the idea as a new revenue generator in 2020.

It seems Noem, a Republican, is a safe bet to sign the bill backed by the GOP-controlled legislature. Politicians typically avoid overriding vetoes from members of their same party, but in the unlikely case Noem does veto the bill, there is more than enough support for the necessary two-thirds override.

Assuming the bill passes into law in the coming weeks, South Dakota regulators will then have to promulgate rules, a process that has taken between three and 18 months in other states. The South Dakota Gaming Commission already regulates Deadwood casinos, so backers are hopeful these existing relationships can mean a quick turnaround from Noem’s signature to first bet.

In a best-case scenario, Deadwood sportsbooks could be open ahead of the 2021 football season. Though that timeline remains unclear, South Dakota bettors are virtually certain to be able to place bets in the not-too-distant future.

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