What would stop any Alcohol or Liquor Establishment from placing more than 10 Video Lottery Machines in one establishment?

It is becoming quite clear, the South Dakota Legislature has taken away, or restricted the Municipalities policing abilities in relation to the S.D Lottery, and two Attorney General Legal Opinions may explain how this was done.

On September 20, 2022 - the City Council engaged in discussion related to the Deuces Casino's new concept plan for 6010 S. Cliff Avenue, of which has brought to issue, the matter of how many Video Lottery Machines can be placed in one building, let alone, is to set precedent of what these types of establishments may look like in the immediate future.

Deuces Casino is the first, but soon, Alibi Bar and Grill is also bringing forth a concept design that may soon be establishing a new type of establishment within the State of South Dakota. To understand the specifics, let's go back to the origins of the South Dakota Video Lottery System itself.

In 1987, led by the citizens, and therefore established by the South Dakota Legislature, we created a division to be called the South Dakota Lottery under the direction of the South Dakota Lottery Commission. Under the supervision of the commission, an executive director shall administer the state lottery as provided in this chapter. In all decisions, the executive director and commission shall take into account the particularly sensitive nature of the lottery, and shall act to promote and ensure the integrity, security, honesty, and fairness of its operation and administration. The overall management of the state lottery and control over the operation of its games shall rest solely with the South Dakota Lottery.

This division was placed within, and under the authority of the South Dakota Department of Revenue, of which has strict oversight and authority of the overall Lottery itself. And, then Governor George Mickelson posed the very question to Mark Barnett, then the Attorney General of the State of South Dakota:

"Does the legislative and regulatory scheme authorized in implementing video lottery in the state of South Dakota satisfy the requirement of Article III, 25 of the South Dakota Constitution that a state lottery be regulated, controlled, owned and operated by the state of South Dakota?"

Gov. George Michelson

Then, Attorney General Mark Barnett is on record as stating his opinion as such, known today as 1991-04:

"Based upon the review of the information you have provided and legislative and regulatory provisions, the only question of constitutionality that can be raised is whether the video lottery is "owned" by the state of South Dakota. It is my opinion that the legislature has established a video lottery that is state-owned. It is clear that the key component of the video lottery scheme is the video lottery central control system. It is clear that the key hardware and software of the central control system are owned by the State. It is also clear that without these components no person can participate in the State video lottery as a machine manufacturer, distributor, operator or player."

Attorney General Mark Barnett

He goes on to claim:

"I do not interpret the constitutional amendment to require a state proprietary ownership interest in each and every item that is necessary to conduct the video lottery. Though the legislative scheme is such that private individuals own the machines upon which the lotteries are played and the physical premises in which the machines are located, I nonetheless conclude the video lottery is owned by the State. This is due to the fact that no video lottery machine may be operated or provide pecuniary benefit to any private individual without connection to the central control system. Accordingly, I conclude that the statutory scheme is constitutional, when considered in the context of the strong presumption of constitutionality expressed by our Supreme Court."

Attorney General Mark Barnett

Based on that opinion, presenting how the Attorney General's Office and the courts have interpreted the law, we have a South Dakota Video Lottery System that operates under a dual ownership system.

The "State" maintains the control of the "system" of which includes both the Revenue and the Central Control System, while the Private Investors/citizens own the Facilities, the Lottery Machines, the businesses.

What the People of the State of South Dakota have established is a legislative scheme to collect as much 'revenue' for the state through a lottery system, of which increases the property values of private property holders within each of the counties, and cities throughout the state itself.

Clearly, the main definition of the word "Lottery" is defined as a scheme for the distribution of prizes and money of chance.

The whole people making up the State of South Dakota adopted in 1987, a legislative scheme with the goal to increase property values, to create additional tax and fee revenues with the intent reward state citizens with as much revenues as possible to increase their prosperity, both by means of statewide revenues, as well as private revenues of all those who participate within the scheme itself.

As per public discussion this past week:

Greg Neitzert posed the question, "You stated that you are not a bar, or we do not have places for people to sit, but provide to patrons alcohol and beverages sales, in relation to providing a lottery type services..with such an open floor plan, does the average person think of your establishment as a bar or as a casino type atmosphere...what stops you from having 100 video lottery machines?"

"We are operating within the statutory and regulatory limits set by the legislature, and we are allowed to provide such services to the public within the borders of the state itself, anywhere within the city" Drew Duncan, Attorney for Deuces Casino.

To that, Greg Nietzert admitted, we made a mistake, we should go back to the regulations of 2019, as we must admit to our mistake, or completely rethink and establish an entirely different concept altogether.

Pat Starr later added, it was never the intent of the legislature back in 1987 to establish any such casino type atmosphere, which was the reason and cause for stipulating the rule imposing that no video lottery establishment may house more than ten machines in any such location, he to, opposed allowing for more than 2 establishments at this time.

Which begs to ask the question, where do we go from here, and what may the future of the South Dakota Lottery look like, and what can the residents of the City of Sioux Falls do to restrict these establishments from becoming large scale casino type facilities?

If this is true, the "System" is established as a legislative scheme, in order to operate and control Video Lottery as a "State" (the whole people), therefore, each establishment may be connected to that central electronic control system owned by the State (the people), while the machines and facilities are owned privately by the citizens thereof (majority ownership must be owned by residents); we could effectively make the "argument" as a "City" that 'we the people' acting as official statewide residents, have the right to formulate our own 'concept' design of which we wish to create within our limits as it pertains to zoning, facility style and design, and manner.

What could that concept plan be in the future? Could we be on the verge of these large Entertainment type venues that not only house four or five separate lottery establishments, but as well as a bar and grille, restaurant, event or dance hall or both, providing the residents of the city of an entirely large scale entertainment facility tomorrow.

Knowing the intent of Deuces Casino, and with the known "Alibi Casino and Lounge Concept'' coming before the council in the future, having this conversation now, may help lead to getting a hold of this concept today, before we lose all sense and control of the process tomorrow. We may be on the verge of amending our city ordinances to include a 2nd or third type of establishment in holding the S.D Lottery itself.

Full Time Bar, Lounge, Grille, Entertainment Venue (event hall, dance floor, adult like activities, etc).

Could we be seeing a new concept in which each has a building consisting of where each would be designed in such a manner, it could be up to 50 spread out throughout the building itself, under the rule one address, and four suites. And if so, can the City of Sioux Falls manage these larger establishments in much the same manner as our medical marijuana establishments.

What could possibly stop this concept from occurring? Another legal opinion, 1989-37 states the obvious:

"The amendment of SDCL 9-29-5 is a clear expression of the South Dakota Legislature's intent to prohibit a municipality from utilizing its general police powers to suppress or regulate state lottery operations. This is consistent with the Legislature's creation of the State Lottery Commission with its extensive enforcement and regulatory powers as it relates to the operation of the State lottery."

Attorney General Roger A. Tellinghuisen

Any municipality may suppress gambling, gaming and gambling houses, lotteries and all fraudulent devices and practices used for obtaining money or property. Any municipality may enter any place where any such activity is practiced or allowed to be practiced, and seize and destroy any instrument, device or thing used for such purpose found therein. The provisions of this section do not apply to any lottery owned and operated by this state.

Today, the only power the "City" has in anything related to the S.D Lottery, is related to any such operating agreement, the right to contract as per SDCL 35-4-19 to 35-4-23. What would stop these "establishments" from placing more than ten video lottery machines under one roof? Absolutely nothing.

Really all the "City" can do is set zoning laws, building and floor plan codes, let alone establish a contract with the 'licensee' to self-govern the establishments themselves.

If the residents of the City of Sioux Falls really wished to suppress gambling, it could effectively allow for these larger concept designs to be placed throughout Sioux Falls, placing them 1,000 feet apart from each other, while also placing them 1,000 feet away from any sensitive land uses such as residential areas, public parks, churches, public schools, any such place where children are present, much the same as we have adopted our uniform rules such concerning medical marijuana. By also doing so, you push these lottery establishments farther away from our local neighborhoods, hoping to chase crime away from the residents, let alone, getting more incentive to build less lottery establishments on every block, each corner of the city itself.

Since its inception in 1987, the South Dakota Lottery has generated millions for the citizens of the State, today it generates nearly $250,000,000 in net proceeds, of which gets deposited into the Capital Construction Fund of which becomes apportioned as such, of which 61% of the profits go to the State's Water and Environment Fund, 5% goes to the State's Ethanol Fund, 34% goes to the State's Highway and Bridge Fund, while the increased property values across the state generates more revenues for South Dakota Public Education apportioned across all school districts.

The voters have gone to the polls several times to either get rid of S.D Lottery, or to expand the lottery, and every time, the expression of the voters has always been, to maintain the lottery, while expanding the lottery.