Screenshot of a tutorial on how to use a video lottery machine. (Courtesy of South Dakota Lottery)
A lobbying group is hoping for bills during the 2024 legislative session to increase lottery revenues across the state.
Matt Krogman, with the South Dakota Licensed Beverage Dealers and Gaming Association, told state lottery commissioners at their meeting Thursday in Pierre that the move would be “proactive” as video lottery revenues, inflated during the pandemic, start to slow down in growth.
State lottery revenue — including video lottery, scratch games and lotto games — jumped 26.97% in fiscal year 2021 and another 10.34% in fiscal year 2022. Growth fell to 2.95% in fiscal year 2023, and the South Dakota Lottery estimates revenue will end fiscal year 2024 at just under a 1% increase.
Video lottery income, which is the money that people lose to the machines, between July and December this year stands at $135.83 million — a 1.37% decrease from that time last year. While that income is still ahead of pre-pandemic numbers, it’s a sign that lottery spending might be cooling off slightly, said South Dakota Lottery Finance Manager Aric Frost.
“We haven’t really dropped off because that could be a little deceptive with those COVID years. It’s a good thing to see,” Frost told commissioners.
Lottery makes up one of the largest single revenue sources for the state each year, following sales and use tax — which accounted for about two-thirds of state revenue last year — and contractor’s excise tax.
Krogman told commissioners the association is considering three bill ideas for the upcoming legislative session:
- Expand the number of video lottery machines a licensed business can house from 10 to 15 machines.
- Increase the video lottery bet limit from $2 to $5 and offer a public statewide progressive jackpot, which is a jackpot which increases each time the game is played but the jackpot is not won, up to $25,000.
- Or, as an alternative, increase the bet limit from $2 to $4 for video lottery.
The bet limit increase to $5 and statewide progressive jackpot would be a “major change,” Krogman said. Video lottery bet limits have not changed since it was first introduced in South Dakota in 1989.
“I think sometimes people forget about the establishments who have to employ people,” Krogman said. “I mean, they’re businesses who are partnering with the state. … With my business back home, if I hadn’t made any changes since 1989 I don’t think I’d still be in business.”
Scratch ticket bet limits, by comparison, have increased significantly, Krogman said.
“If we wait until the bad times come, then it’s too late,” Krogman said about lottery revenues. “We need to be proactive and find answers to solutions before they become major problems.”
Sen. Ryan Maher, R-Isabel, introduced a bill last session to increase the video lottery bet limit to $4 and increase the jackpot, which is the maximum amount someone can win from a video lottery bet, from $1,000 to $2,500. The bill failed in the Senate chamber.
Business owners and members of the association presented to the commission at its September meeting asking for support to increase bet limits. While the commission doesn’t take official positions on potential legislation, Krogman sought individual support from commissioners on the ideas.
Commissioner Tona Rozum, a former state legislator from Mitchell, said she thinks the effort is “great.”
“We know it’s a giant hill in the Legislature with some naysayers, because I don’t think they understand we are in a business proposition with these people,” Rozum said, “and we need to treat them as business partners, which I don’t think we always do very well from a state level. So good luck.”
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