Monday, November 3, 2014

Deadwood Keeps Coming Back For More, More, More . . . But So Far The Results Have Been Less, Less, Less. Not Sure Passing Amendment Q Will Do Much For That Town.

     That all of us in South Dakota are being asked to vote on a Constitutional Amendment (Q, the one that will expand gaming options in Deadwood) referred to the voters by the SD State Legislature correctly implies that every South Dakotan has a stake in Deadwood's fortunes.  For one thing, games that are available in Deadwood will be available in all of the tribal casinos within the state, a development that seems to sit well within the Indian community.  For another, those of us in the tourism industry (I have interests in lodging facilities in the state) know full well that Deadwood's casinos and special events bring people into South Dakota.  They spend their money in plenty of places beyond Deadwood, always appreciated by folks like me.
     Soooo, nothing against Deadwood or its general argument that by expanding gaming opportunities it puts the city on a playing field that's level with other gambling centers in the U.S.  But even as Amendment Q is likely to pass, I'm skeptical about its value as an overall revenue-enhancer to the city. Deadwood's current array of gaming options and bet limits are of a different, much larger universe than those that were allowed when legal gambling there began about 25 years ago.  I have no doubt that there has been a revenue growth curve that rose steadily upward for many years thereafter, probably nudged along by periodic bet-limit increases and gaming option-expansions.
     But lately, things have stalled.  From the South Dakota Department of Revenue website I note that in 2010 total retail receipts in Deadwood were $197 million, a figure that hasn't come close to being matched since then, with 2011-2013 receipts hovering around $177 million/year.  There may have been a one-time burst of activity that kicked up the numbers for '10--but the subsequent 10% falloff/plateau, when added to naturally rising costs via inflation, make for a serious economic hit in anybody's books.  It's little wonder that the city is vigorously trying to expand its gaming base by adding new games via Amendment Q.
     My problem with the Amendment is that I doubt it will do much to change Deadwood's fortunes.  The casino market in this country is so saturated that I doubt a few additional games will result in much change in demand for the "Deadwood experience."  My guess is that  those casinos that can afford to add the new games will be able to put the squeeze on those with limited financial resources, a trend noted by the New York Times last Summer, and one that pretty clearly caused the Gold Dust's just-ended nearly 2 year-long shutdown.  Basically, the size of the pie won't change much. It will just be likely to get divvied up into fewer, larger pieces.
     Meantime, Deadwood's underlying problem of economic stasis isn't likely to get resolved. The city's hiring of consultant Roger Brooks, whose input when Rapid City sought his counsel resulted in downtown Rapid's masterpiece, Main Street Square, is probably a smart move by Deadwood officials and leading entrepeneurs, who must know by now that gambling isn't the only game in town. Brooks has already gotten the city to ask itself some basic questions about future development.   In a way, passage of Amendment Q runs the risk of a "moral hazard," letting Deadwood continue on with the same-oh, same-oh that has led to its present state of economic stagnation.  At best, its supporters should see it as a band-aid, stemming the flow of declining public interest, but not really doing much to fix the cause of the bleeding.


  1. How is it that the Deadwood casino industry is so important that the whole State gets a voice in it, but a gambling casino supported by the Democrat candidate for governor in 2010 and the losing candidate in the Republican primary that same year, the two men who were their respective party's leaders in the State Senate that year and also supported by many in Sioux Falls as a competition for the casino across the border in Iowa could get little more than a yawn from the legislature and the Governor who was elected in 2010?

    The then proposed casino at the crossroads of I-29 and I-90 would have probably raised 5 times as much for the State as the whole gambling industry in Deadwood.

  2. Didn't follow it that closely, Lanny, but would love to know more about it.