south dakota sports betting referendum
Legal Developments

South Dakota Sports Betting Still Set for 2020 Ballot

South Dakota lawmakers passed a sports betting ballot measure early last month. For now, it appears the coronavirus outbreak won’t stop South Dakotans from seeing that referendum on their 2020 ballots.

If a majority of voters approve the referendum in the November election, sports betting will be legalized. That doesn’t mean South Dakotans will be able to place a bet immediately.

Lawmakers would then need to pass another law in the 2021 session to determine further parameters of sports betting, including online access and tax rates. The referendum, as written, would allow commercial casinos in Deadwood, as well as Native American casinos across the state, to open retail sportsbooks on their properties.

Other states may call special sessions later this year, but for now it appears South Dakota will be just one of four states to pass any type of sports betting bill in 2020. It joins Maryland, which is also set to have a sports betting question on its 2020 ballot, along with Virginia and Washington, which both authorized certain entities to take bets.

How Sports Betting Grew on Lawmakers

A year ago, it appeared South Dakotans wouldn’t have a chance to approve sports betting.

The state constitution prohibits gambling, with exceptions carved out for the casinos in historic Deadwood as well as those on sovereign tribal lands. All new gambling expansion, such as a 2014 referendum that permitted Deadwood casinos to offer keno, craps and roulette, are subject to statewide approval by voters.

In 2019, sports betting backers in the legislature tried to give voters a similar option for wagering, but efforts fell short. Republican Gov. Kristi Noem, who took office in January 2019, opposed the new measure, questioning the benefits of any type of gambling expansion. This helped tank GOP support in the heavily Republican legislature.

Facing a tighter budget in 2020, Noem and other Republicans began to warm to the idea. The governor’s office had little involvement in a follow up ballot measure effort earlier this year. With Republicans looking for new options to bolster tax revenues from Deadwood leading the measure, this year’s referendum passed out of the Senate 24-10 and the House of Representatives 36-27.

2020 Election Still on Course

Coronavirus had made projecting any event difficult, but South Dakota seems ready to carry on its November general elections as scheduled. One of the least-densely populated states, South Dakota has not ordered formal statewide shelter-in-place restrictions. It still plans to hold its statewide primary elections June 2.

The bigger question, at least for now, is if voters will support sports betting. With bipartisan political support and the financial backing of the Deadwood casinos, it appears the “yes” camp will head into November with an advantage. The 2014 gaming vote shows voters are fine with new gambling forms for existing casinos, and it would seem like sports betting wouldn’t be an issue.

Still, any voter decision leaves a great deal of uncertainty. In Colorado, which also confines its commercial casinos to historic gaming communities, voters only narrowly approved a sports betting measure despite overwhelming political and financial support backing the referendum. South Dakota as a whole is more culturally and politically conservative, which could also dissuade voters from approving a new form of gambling.

If approved in November, lawmakers would then need to write a law that outlines the reach for new sportsbooks. Statewide mobile betting would create a larger revenue stream but could prove less palatable politically.

With or without online betting, gaming officials would still need to form and enforce rules for the new sportsbooks, a process that has taken between three to nine months in other states. A best-case scenario sees the first bet sometime in summer 2021.

Though it’s at least a year away, legal sports betting would be welcome news for South Dakota casinos. In terms of gross revenue, South Dakota may have the smallest impact of the handful of states to approve sports betting bills this year, but if voters approve, it would still add another member of the growing group of states with legal wagering.

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