So Far, South Dakota Sportsbooks Would Pose Little Threat To Iowa Operators

Posted By Derek Helling on January 12, 2021

With the legalization of sports betting in South Dakota, some sportsbooks in NW Iowa may be worried about losing out-of-state clientele when it launches. However, if the latest proposal for regulating SD sports betting becomes law, they can put those worries to bed.

The present language of the bill before the SD Legislature would confine legal wagers to casinos within the town of Deadwood. For that reason, South Dakota bettors who currently cross the state line to place legal wagers online in IA will probably continue to do so.

Few takes from the South Dakota sports betting bill

In November, South Dakota voters legalized sports betting via the ballot. That ballot measure only authorized the legislature to move on the issue, however. That’s what the body is doing with SB 44.

There are some industry-friendly tenets. For example, the cost of a sports wagering services provider license fee is only $2,000 annually. The bill contains few restrictions on types of wagers SD sportsbooks cannot accept. In some ways, though, the bill’s brevity may be a weakness.

The bill contains no mention of requirements for sportsbook operators to comply with responsible gambling protocols. Additionally, the language pertaining to wagering on college sporting events could use some clarification.

In Section 42-7B-82 on betting prohibited on certain events, the bill reads:

“any collegiate sporting event in which any team or athlete from a university or college in South Dakota is competing.”

Depending on interpretation, that could potentially bar all betting on the entire NCAA D1 men’s basketball tournament every year that South Dakota State’s men’s team would qualify. The annual Summit League men’s basketball tournament could be off the books as well.

Like the law in Iowa, this bill would also ban wagering on individual college athletes’ performances.

Furthermore, another part of the bill that could use some refinement is the location restriction for bets.

Will there be online sports betting in South Dakota? It’s a matter of interpretation

Several places in the bill, the wording limits sports wagering to within the four walls of a Deadwood casino. Section 42-7B-79 addresses this point most clearly.

Even within that paragraph, however, there are questions. It reads:

“Any sports wagering may only be conducted in the interior of a licensed gaming establishment within the city of Deadwood. Each operator or route operator that is authorized by the commission to conduct sports wagering shall install and maintain equipment that is approved by the commission to ensure that all bets are placed from within the interior of a licensed gaming establishment within the city of Deadwood.”

A cursory read of that text suggests that bettors will have to physically be at a Deadwood casino to place a legal wager. However, that may not be the case. As long as the physical servers providing access to online sportsbooks are “within the interior of a licensed gaming establishment within the city of Deadwood,” the casinos may be able to offer online sports betting all over the state.

It’s also possible that regulators may interpret this statute to allow for local online wagering. Again, however, the servers would have to be on-site at a Deadwood casino.

Then there’s the matter of SD tribal casinos.

The bill would also allow tribal casinos to offer retail sports betting, at the least. So, whether they could offer online betting and to what extent would be governed by their compacts with the federal government and the state.

So, how could this affect Iowa sportsbooks? That largely depends on how South Dakota ends up answering the question of online betting.

A narrow interpretation would be a win for Iowa sportsbooks

If the legislature enacts this framework and the state does prohibit statewide online wagering, IA sportsbooks should feel little effect from Deadwood casinos offering sports betting. Two of SD’s most populous counties, accounting for nearly 30% of the state’s population, sit along the Iowa border.

Traveling from Sioux Falls, the most populous city in the state, to Deadwood is about a five-hour drive each way. Conversely, Sioux Falls residents can cross the Iowa state line in a matter of minutes. Thus, many SD bettors may still do so even after Deadwood casinos start taking bets on sporting events.

However, if SD does allow for statewide online betting, that may not be the case to the same degree. It will depend on how competitive the market is with IA books. SB 44 makes no mention of mobile betting, so it’s hard to tell how that will look.

All signs point toward IA sportsbooks not seeing much of a reduction in whatever traffic they are pulling from across the SD border in the near future. If SB 44 becomes law in its current form and nothing changes soon thereafter, that might become a long-term status quo.

Photo by Amber Hunt / AP
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Derek Helling

Derek Helling is a freelance journalist who resides in Chicago. He is a 2013 graduate of the University of Iowa and covers the intersections of sports with business and the law.

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