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HB 1048: Third Try at Increasing Video Lottery Machine Cap from 10 to 15 Per Establishment

Someone’s still looking out for North Sioux City’s stiffer gambling competition from across the river. Dakota Dunes Senator Dan Lederman tried and failed twice to get the Legislature to increase the number of  video lottery terminals any one establishment can have from ten to fifteen. Lederman has left the Senate to focus on his bailbondsman business, but the Legislature, at the request of the Department of Revenue, will take up House Bill 1048 to bolster the gambling branch of the poverty industry from which Lederman profits.

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Spend more, win more! Taxpayers are counting on your addiction and inability to do math!

HB 1048 doesn’t directly raise the cap to fifteen terminals. It removes the current statutory cap of ten terminals, but then it hands the rulemaking authority on the maximum number of machines to the South Dakota Lottery Commission. HB 1048 says the number of terminals per establishment is “not to exceed fifteen video lottery machines,” and the lottery commission “may set additional requirements or conditions for the placement of each video lottery machine in excess of ten machines.”

HB 1048 uses similar passivity to coax legislators into letting the lottery commission raise video lottery bet limits and payouts. The bill strikes the current bet limit of two dollars and lets the lottery commission set the bet limit as high as five dollars. The bill also strikes the current limit of one thousand dollars that the machines can pay out per bet in free games or credits and allows the commission to set maximum awards per play of up to $25,000.

Ah, quinvigintupling the payout—that must have been in Lawrence & Schiller’s presentation to the lottery on how to rebrand the games as more good fun. Too bad HB 1048 can’t also make the video lottery machines spit out bongos and chilidogs.

HB 1048 also adds one more set of discussions that the South Dakota Lottery Commission can have in secret: “Discussing business strategies, marketing strategies, pricing strategies, or financial matters, if public discussion may be harmful to the competitive position of a licensee, an applicant, or the lottery.” Tough noogies: you work for the state, you profit from our system of taxation, you give up some confidentiality that you enjoy if you stay completely in the private sector.

House Bill 1048 looks like a sneaky way to expand video lottery in South Dakota without asking legislators to take responsibility for it. Let’s vote it down and have legislators keep a tight rein on video lottery.

19 Comments

  1. grudznick 2016-01-11 20:53

    It would be silly if lottery machines spit out bongos. Nobody really needs more than one set of bongos. But if they played bongo songs and spit out chili dogs, then you’d really have something.

    Otherwise, let these people set up as many machines as they want. It’s not like there’s a line of people waiting to get to them. They’re just wasting their money because the math-impaired are maxed out spending their lunch money on that silliness, voluntarily keeping all of South Dakotan’s taxes down.

  2. Porter Lansing 2016-01-11 22:48

    Why beat around the bush, Mr. Lederman. South Dakota needs about seven state owned
    sports books. Three in the Hills and four along I-29. Why let Draft Kings get SoDak sports bets?
    Q- Why do the Vikings wear purple?
    A- If you’d been choking for 40 years, you’d be purple, too. ?

  3. caheidelberger Post author | 2016-01-12 06:10

    (Say, Porter, now that you mention it, do you see any psychological connection between Vikings-bashing and SDDP-bashing?)

    If video lottery machines spat out chilidogs, I might play. If we could get them to fire chilidogs out at high trajectories like artillery at Sioux City, I would definitely play.

  4. Porter Lansing 2016-01-12 07:11

    -It has long been assumed that ardent sports fans derive excitement and a sense of community from rooting for a big-time team. But a growing body of scientific evidence suggests that for some fans, the ties go much deeper.
    -Some researchers have found that fervent fans become so tied to their teams that they experience hormonal surges and other physiological changes while watching games, much as the athletes do.
    -The self-esteem of some male and female fans also rises and falls with a game’s outcome, with losses affecting their optimism about everything from getting a date to winning at darts, one study showed.
    …@Mr. Heidelberger ~ The above does parallel the Dakota War College guy and his bashing of our resurgent Democratic team in South Dakota. ?
    http://www.nytimes.com/2000/08/11/sports/sports-psychology-it-isn-t-just-a-game-clues-to-avid-rooting.html?pagewanted=all

  5. Nick Nemec 2016-01-12 07:15

    I like chili dogs.

    I’m not as fond of the Lottery Commission. During my long ago legislative career I offered an amendment requiring the lottery commission to check video lottery winners against the list of deadbeats owing delinquent child support over a certain amount and, if the video lottery winner was on the list, to apply the amount toward their arrears. The Commission actively opposed and lobbied against the proposal and it failed in a House floor vote. The Commission supported gamblers and deadbeats over kids needing money to survive.

  6. Porter Lansing 2016-01-12 07:25

    Good one, Nick. Your proposal has been in effect in CO for a long time and many kids have been benefited. In fact, in lieu of the big PowerBall drawing it’s policy that only six states will allow a winner to remain anonymous.

  7. caheidelberger Post author | 2016-01-12 07:33

    No gambling for deadbeats… or automatic deduction from their winnings to feed their kids—I’m totally for that. I’m against letting the unelected and less accountable Lottery Commission have more control.

    Interesting point about winner anonymity, Porter. Even if the state doesn’t release the name, does the state still have the name so it can check for tax and child-support compliance?

  8. Michael Wyland 2016-01-12 07:41

    The world has changed in several ways since video lottery was enacted in South Dakota more than 25 years ago. If one is opposed to video lottery, stop reading, because none of the following will change your mind.

    Changes include: 1) inflation turning the $2 bet limit into a $1 bet limit (run the Fed’s inflation calculator); 2) the increase in the state’s percentage share of video lottery revenue has made smaller, more rural establishments unprofitable and centralized machines in more urban “casinos”; 3) the smoking ban has affected machine revenue negatively; 4) casino owners are using 1990s-era terminals prone to breakdown and for which replacement parts are becoming expensive and scarce; 5) new “line games” are expensive to introduce, especially when profit margins are lower than when video lottery started; and 6) video lottery owners in areas with high concentrations of machines face new competition from full-featured casinos in Iowa (Sioux City and Larchwood).

    While the state’s percentage share of video lottery revenue has increased, its video lottery revenues have be relatively flat for a long time, which means that they have been reduced when accounting for inflation. For example, 1994’s net state revenue was higher than that in 2013 when adjusted for inflation, despite the state’s percentage share of gross revenue having increased dramatically.

    The economics of video lottery reflect a market frozen in time, with decaying results for both video lottery owners and the state. As citizens, we can: 1) kill video lottery; 2) allow it to wither away as it is now; 3) we can sustain it at historic levels through incremental changes; or 4) we can expand it.

    Four choices are two more than most people can handle , but there it is.

  9. Porter Lansing 2016-01-12 07:43

    Yes. The state lottery commission handles the payout not a multi-state commission even though the game is multi-state. The only way to be anonymous is to form a revocable trust and buy the tickets through the trust. Then only the name of the trust is made public.

  10. Nick Nemec 2016-01-12 07:46

    If memory serves me right, this was 1994, the bill I attempted to amend required the State to check and withhold winnings of gamblers who were past due on certain tax remittances to the State. I wanted to add the child support deadbeats, a list of which was already kept by the child support enforcement office.

    I’d have to check current law and rule but this practice may have been adopted a few years after I left office.

  11. Porter Lansing 2016-01-12 07:46

    OH, I see your point now. I would hope the states that allow anonymity would still check for outstanding debts and I’d hope the Fed’s check also for any income tax or prior fraudulent debt that’s unpaid.

  12. Nick Nemec 2016-01-12 08:05

    Michael Wyland, good analysis.
    Option 1 would require a lot of legislative support and support from the governor, I doubt it would become law.
    Option 3, incremental changes would require yearly fights that would fatigue legislators and might cause them to toss up their hands in frustration and indifference and go along in a vain hope of the issue going away.
    Option 4, the entire enchilada, would be a big fight with all players showing up. The outcome would be in doubt, it’s an all or nothing bet. But if the gambling proponents lose they would show up again the next year working on Option 3, like addicted gamblers they are a persistent lot.
    Option 2 Inertia is a powerful force, doing nothing to fix a non problem, steady or falling gambling revenues, is a tempting option for legislators and the best option for anti gambling folks who want to reduce gambling’s influence in SD and grip on State government.

  13. caheidelberger Post author | 2016-01-12 08:55

    Michael mentions competition—funny how South Dakota picks these get-rich-quick schemes that depend on doing something before anyone else gets serious about it. Video lottery apparently depended on Sioux City and other neighboring areas not offering competitive games. EB-5 depended on South Dakota moving big in the program before other states caught on. Now that there’s competition in gambling and EB-5, South Dakota languishes.

  14. caheidelberger Post author | 2016-01-12 08:57

    Porter, there must be something wrong with my psychology. The SDDP’s losses don’t make me happy, but I still have my self-esteem and optimism.

    Gambling doesn’t appear to break as a straight partisan issue. Are opinions on gambling equally mixed on both sides?

  15. Porter Lansing 2016-01-12 09:10

    point 1 – That’s because to we liberals politics isn’t a game. It’s the manifestation of our desire to help the less fortunate. Those who view it as a greased pole where to get ahead in life and politics you must crawl up the back of anyone above you and stand on the hands of those below do derive pleasure from the pains of those socially beneath and harbor disdain for those financially above. Liberal psychology seems to be less detrimental to the host (us) than conservative dog eat dog.
    point 2 – I hope opinions on gambling aren’t broken down by those who like it and those who don’t like it. I believe in tolerance for many things I don’t like and hope those like me are the vast majority.

  16. Roger 2016-01-12 09:24

    it looks like hb 1053 eliminates taxes on all “amusement devices”

  17. Michael Wyland 2016-01-12 10:28

    Cory:

    The competition in gambling comes primarily from casinos in Iowa that don’t have to operate under South Dakota’s restrictive rules. They offer high bet limits, more games. more modern games, and food & drink options unheard of (and unsupportable) in video lottery establishments.

    Video lottery owners in SD can compete against each other in a burdensome but equal regulatory environment. It’s the cross-border competition from differently-regulated competitors that places South Dakota video lottery at a comparative disadvantage.

  18. caheidelberger Post author | 2016-01-12 21:51

    Roger, does that mean no taxes on carnivals?

    Michael, I hate to get into a race to the bottom with Iowa. Maybe we need to think of a taxation scheme that doesn’t depend on such competition.

  19. leslie 2016-01-13 22:28

    With casino lobbies in bed with republican state government AND payday lenders, who needs enemies? Little people have enough.

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