We all know Governor Daugaard and the rest of the state’s leaders are hoping to save our budget by persuading the Supreme Court to reverse itself and allow South Dakota to collect sales tax from remote online sellers. (Remember: this is conservative South Dakota Republicans cheering for activist judges to throw out Scalian stare decisis and permit them to tax corporations more.)
Meanwhile, the state is keeping its fingers crossed for the Supreme Court to o.k. another potential revenue source: sports betting. Last month, the Court heard Christie v. NCAA, New Jersey’s effort to overturn a federal ban on sports betting in all but four states. Various estimates say that Americans bet $150 billion to $400 billion a year on sports. All those bettors are already supposed to be reporting their winnings on their 1040s, but if the Supreme Court votes states’ rights on Christie v. NCAA, South Dakota can bring that betting into the casinos and regulate and tax it.
Some wildly speculative math: multiply the low-end $150 billion by South Dakota’s 0.27% of the national population, hit that with a 4.5% sales tax, and presto! South Dakota gets $18 million.
South Dakota hasn’t joined the New Jersey lawsuit, but state government is laying out what we should do to cash in if SCOTUS rolls us Liberty Bells. A new white paper from the Department of Revenue says that after amending our constitution to allow sports betting, we’d want to take the following steps:
The Commission on Gaming would need to have authority to regulate sports betting.
The department recommends sports betting occur only at establishments licensed by the Commission on Gaming.
Under federal law, tribal governments can conduct any gambling authorized by state law if there is a legal agreement in place between a tribe and a state.
That means current gambling compacts would need changes for sports betting to occur at tribal casinos in South Dakota.
The white paper recommends prohibiting individuals from receiving licenses to legally accept bets.
The Legislature also would determine how to tax the amount charged by the establishment for taking the bet from the gambler.
The white paper also states that any South Dakota establishment accepting sports bets should be part of a large pool of bets, likely through a multi-state organization similar to what’s used for many lotto games such as Powerball [Bob Mercer, “Gerlach, Wants State Government to Be Prepared for Sports Betting,” Rapid City Journal, 2018.01.15].
The state should also consider taking a moment to consider whether it really wants to promote and profit from yet another activity of socially questionable morality and usefulness. Gambling may not be as bad as drinking or smoking, but addiction happens. And the only people who really seem to profit from sports betting are the house and time travelers.
Nationally, sin taxes generate 3.8% of state revenues. South Dakota already got about 6% of its revenue from sin taxes (and that’s not counting lottery) in 2014; the Governor’s proposed FY2019 budget appears to rely on sin taxes for 5.0% of its revenue. Adding the guesstimated $18M above would raise that percentage up to 6.0% again.
But watch out: as Chris Christie said outside the Supreme Court last month, if the Supreme Court rules for states over the feds on sports betting, it may invite states to challenge federal restrictions on another big moneymaker, marijuana. I wonder if the Department of Revenue is drafting any white papers on that prospect….
If the amount of thought and energy were put into grappling with the core of the issue, properly funding state government, that has been put into fringe schemes to avoid that issue, we might be somewhere.
Trying to get someone else to pya our state obligations does not work. Over time, the boom in initial funding from all these schemes evaporates.
Everybody is all for allowing consenting adults to bet on football and soccer and professional table tennis, but not in a state where the codification of laws is hidden from the public. Mr. Mercer reports about being in favor of gambling by free people but the hiding of meetings by the legislatures.
http://politics.my605.com/cant-find-code-commission-agenda
Grudz, they are all for collecting that money, they just don’t want anybody to know what they do with it after it’s collected.
That is an interesting point, Mr. Tim. I suppose those are two different things, the collecting and the spending. I dare say everybody knows where the spending goes, but where the money comes from is more in the dark. For all we know, we have dark money from out-of-state coming into our coffers and we’re spending it transparently on good teacher’s salaries.