South Dakota Increases Deadwood Gambling Taxes

Casinos in Deadwood, South Dakota, will be forced to pay more of their revenue to the state as legislators bumped the gambling tax to cover shortages in the state budget.

Many states are expanding gambling to increase revenues and fill in budget gaps, while others are asking gaming operators to give up even more of their income to support state coffers. South Dakota became the latest to tighten the noose around the neck of the golden goose, raising the tax charged Deadwood casinos from eight to nine percent.

Bringing additional gaming makes sense, says OCA gaming analyst Sherman Bradley, but he warns against state governments that get too greedy and cause casinos to become financially inoperable.

"The recent example in Rhode Island, where the Twin River Casino is being forced into bankruptcy by a monstrous $20 million payment each month, illustrates the need by government to show restraint," says Bradley. "Allowing these businesses to prosper, thus building greater revenues for the future, is a wiser choice than pushing the absolute maximum they can feed the state without collapsing."

Deadwood's new taxes will generate roughly $1.5 million for the state, all of which is earmarked toward balancing the state budget. The state also moved to allow the slot casinos to replace nickel machines with penny slots, a move thought likely to create an extra $500.000 a year due to the popularity of penny slots.

Bradley points out that, in order to compete and hold on to loyal patrons while drawing new ones, casinos need to constantly invest their profits in themselves. Comps for regular players and refurbishment of physical plants requires that states recognize daily operating costs are not all that casinos must clear.