South Dakota Sports Betting Takes First (Small) Step Toward Legalization

South Dakota lawmakers heard sports betting legislation testimony Wednesday, beginning the long process to implement sportsbooks after voters overwhelmingly approved legal wagering on last year’s ballot. As officials work through key regulatory details such as tax rates and eligible bets, they must still consider the larger question over statewide mobile access.

Senate Meeting

The Senate State Affairs Committee heard a bill Wednesday that would allow retail sportsbooks, betting kiosks and mobile apps exclusively within casino confines in the historic gaming city of Deadwood. The committee amended the original bill to allow wagering “on the premises” of a casino instead of “within the interior,” but still limited any bets to within property lines of the roughly two-dozen casinos within Deadwood city limits. State law also allows sportsbooks on the premises of Native American casinos on sovereign tribal lands.

Commercial and tribal gaming stakeholders testified in favor of the bill at Wednesday’s hearing. For both commercial and tribal gaming interests, retail sportsbooks would be another amenity to attract in-person visitation to their casinos, which feature restaurants, entertainment options and more lucrative gaming options such as slots.

Backed by the state’s leading gaming interests as well as its revenue department, the Senate bill appears the leading vehicle to approve sports betting in the state. It still has to compete with a far more expansive proposal to allow statewide mobile wagering.

Mobile Bill Introduced

House Rep. Tom Pischke and Sen. Kyle Schoenfish introduced a bill Wednesday that would allow mobile wagering from anywhere within state lines. Though South Dakota’s constitution prohibits gambling outside Deadwood or tribal casinos, mobile proponents have argued online betting is legal as long as computer servers are located in those designated areas.

The mobile proposal would drastically increase South Dakota’s revenue potential. Online wagering makes up more than 80 percent of total betting handle in mature markets such as Pennsylvania and New Jersey. With one of the nation’s lowest population densities, and only a handful of locations to place in-person bets, South Dakota would surely see similarly lopsided mobile wagering figures.

Questions about the online servers’ legality aside, the bill will likely face steeper political challenges than the retail-only bill heard Wednesday. Despite voters’ support of sports betting on last year’s ballot, many Republicans in the GOP-dominated legislature largely oppose gambling, including Speaker of the House Steven Haugaard.

Next Steps

The State Affairs Committee must await the completion of a jail and prison impact statement before it can vote on the retail-only bill. That vote could come at a meeting later this month.

In the meantime, the House is set to take up a companion to the Senate’s retail-only sports betting bill in the coming weeks. Introduced Tuesday, the bill has not yet been assigned to a committee.

Schoenfish, who is also the Senate Majority Whip, serves on the State Affairs Committee and could look to advance his mobile bill over the retail-only proposal. The next committee meeting after the prison study’s completion could go a long way in determining the fate for both online and retail sports betting in South Dakota.