The South Dakota Lottery had its best Christmas season ever a year ago for sales of scratch tickets, sales of Powerball and lotto games overall. They are on a record pace this year, and the new slot-machine versions of video lottery terminals are netting more money in their first months for the owners and the state treasury than the reliably producing old ones did.
Two tribal governments have gained authority to greatly increase the numbers of slot machines at their casinos in Flandreau and outside Watertown. Deadwood casinos, meanwhile, received the OK to raise bet limits to $1,000, and that tenfold increase likewise applies to all tribal casinos throughout South Dakota.
Now the South Dakota Lottery Commission is embarking on a next step of using digital communication technology to possibly offer jackpot progressive games through video lottery terminals and open the way to a multitude of new ways for people statewide to gamble in any establishment that can get a local beer license and clear the necessary background checks.
Not since the late 1980s during the Mickelson administration, after voters gave approval to a state lottery in 1986 and to Deadwood casinos in 1988, has South Dakota seen such an explosive expansion of legal gambling.
This new surge all comes in the first two years of Gov. Dennis Daugaard’s administration. Gambling wasn’t a significant issue of discussion during the 2010 gubernatorial campaign. Yet, since Daugaard’s election, legal gambling has been granted numerous more opportunities than during the previous 16 years of governors Mike Rounds and Bill Janklow.
Helping prompt it were several unrelated events:
The Rounds administration was ensnared in a lawsuit filed in federal court by the Flandreau Santee Sioux Tribe seeking more slot machines;
State government needed to rebuild its revenue streams during the recession;
Play dropped in Deadwood and video lottery establishments after voters ratified the Legislature’s smoking ban for bars, casinos and restaurants with alcohol licenses; and
The lottery marked its 25 anniversary this year.
Gov. Daugaard wanted state government’s finances solidified, not only through budget cuts in his first months of office, but also by looking to efficiently drive more revenue to the treasury.
He gradually reshaped the Lottery Commission through appointments of new members and let the lottery’s administrative staff know they could be more open and aggressive in trying new ideas.
That was a change from the previous era, when lottery officials worked cautiously in what was more of a preservation mode, while successfully wringing more revenue from the lottery’s internal operations through business efficiencies.
One of the first moves made by the Daugaard administration was to give a green light to what are known as line-up games.
Video lottery traditionally offered three forms of games — poker, blackjack and keno — and the line-up games were legal under state law, but hadn’t been allowed by the Lottery Commission.
The change meant businesses could buy new machines offering games where symbols and numbers line up, similar to slot machines.
Their products were very different from what players had seen for the past 20 years on the VLC 8700 terminals that had come to dominate the market because of their reliability, but had been declared obsolete and weren’t being manufactured any longer.
That expansion into new products and new machines initially was fought by the Deadwood Gaming Association. The Lottery Commission proceeded, however. And in the 2012 legislative session, Deadwood casinos — which are regulated by the state Commission on Gaming, rather than the Lottery Commission — received authority to offer $1,000 bet limits as a new attraction.
Video lottery establishments have gradually moved into the new games. As a whole, the establishments — and in turn the state treasury, which receives half of the net money lost by players in the machines — are seeing better revenue from them.
According to lottery officials, the new games so far generated more NMI — net machine income — on average than did the old “legacy” games. From May 1 through Nov. 30, the new games pulled in $67.30 NMI apiece per day, while the legacy games did $47.46.