Mustang Sally’s Loses Gambling License Over Illegal Proxy Betting

Written By Adam Hensley on October 26, 2022
Proxy beting at Mustang Sally's resulted in loss of operator license

A popular South Dakota sports bar with slot machines and sports betting kiosks just lost its operator and retail license.

Mustang Sally’s regularly facilitated proxy bets, which are illegal gambling in South Dakota.

The South Dakota Commission on Gaming also issued the Deadwood business a $25,000 fine, which the sports bar must pay before the end of October.

What happened at Mustang Sally’s

State gaming officials found that Jennifer Haefs, a Mustang Sally’s employee, made at least 95 sports bets for bar owner Toby Keehn and others while on the job. Keehn explained that he often would phone his sports bets to Haefs, who’d then place bets at Mustang Sally’s.

“I’m incredibly sorry for my bad judgment,” Keehn told the SDCG. “It definitely would never happen again.”

In addition to stripping the Deadwood casino of its gambling license, the commission deemed Keehn unfit to operate the establishment. Keehn’s attorney Roger Tellinghuisen asked the gaming commission for “compassion and consideration,” arguing that with no gambling license, Mustang Sally’s would eventually close.

Mustang Sally’s did end up keeping its food and beverage license.

Haefs also lost her license – the “only choice” she had for meaningful employment, according to Tellinghuisen.

“She now understands that (she did something wrong),” Tellinghuisen said.

What is proxy betting and how serious is it?

It’s simple. Proxy betting happens when someone places a bet on behalf of someone else.

Transaction records, surveillance video, and numerous text messages showed that Haefs placed these proxy bets for Keehn and other Mustang Sally’s employees. There’s an allegation stating that Keehn illegally extended credit and that he also illegally placed bets for others.

In South Dakota, proxy betting is a Class 6 felony. It’s punishable by up to two years in prison and a $4,000 fine. The state’s law says:

“No licensed gaming establishment, licensee acting within the scope of employment as a licensee, or employee of a licensed gaming establishment acting within the scope of the employee’s employment may extend credit to another person for participation in gaming.”

How does this impact gambling in South Dakota?

Well, for starters, South Dakota bettors can no longer place any type of wager — sports-related or otherwise — at Mustang Sally’s.

The state’s sports betting industry as a whole is relatively new yet limited compared to other states across the country. One reason is that bettors can only place bets in Deadwood – nowhere else in South Dakota.

South Dakota doesn’t partake in the same bet-from-anywhere convenience as neighboring state Iowa. A bill attempting to legalize online sports betting made its way to the House in 2021 but was defeated.

So, if you’re placing a sports bet in-state, you must wager in Deadwood and within the casinos and historic building officially licensed by the city. Online sports betting remains illegal.

There’s now just one less licensed entity within the state to place your bets.

DFS and in-state college sports betting are illegal in South Dakota

South Dakota Gov. Kristi Noem signed Senate Bill 44 into law in March 2021, which legalized sports betting in the city. Deadwood mayor Dave Ruth Jr. placed the state’s first-ever legal sports bet on Sept. 9 that year.

In South Dakota, you can bet on all professional sports leagues. Bettors can also bet on college sports outside of the state, meaning placing bets on South Dakota State football or basketball teams is prohibited.

In addition to in-state college betting, daily fantasy sports contests are illegal as well. DFS sites such as DraftKings and FanDuel don’t accept entries from South Dakota players.

Photo by Shutterstock/PlayIA
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Adam Hensley

Adam Hensley is a journalist from Des Moines, Iowa. His byline has appeared in the Associated Press, Sports Illustrated and sites within the USA Today Network. Hensley graduated from the University of Iowa in 2019 and spent his college career working for the Daily Iowan’s sports department, both as an editor and reporter.

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