Last batch of available video lottery licenses approved in Sioux Falls

SIOUX FALLS — Sioux Falls has hit the limit for video lottery.

At least for a while.

The city council approved 20 malt beverage licenses on Tuesday, Dec. 20, bringing the total number of gambling establishments to 186 and ending debate on the issue until at least next summer.

The council in November set a cap on available malt beverage licenses, one of the two paths to offering video lottery in South Dakota. A full liquor license, which includes spirits such as whiskey or gin, also can have video lottery but that is regulated by the state.

Now, unless the council decides otherwise, the only way that number can grow is if the city population increases.

Every two years, the city attorney’s office will determine the number, increasing by one license for every 5,000 new residents as calculated by the U.S. Census Bureau. The next population estimates will likely be available in June.

There were 29 applications on the council’s agenda on Tuesday, but when they hit 20, they denied the remaining nine.

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City councilors Greg Neitzert and Rich Merkouris researched and sponsored the limits on video lottery growth. An accompanying ordinance says that any given building can only have up to 30 video lottery terminals.

On Tuesday, the votes were grouped together by types of establishments, the number of licenses that were already at that location and ownership groups.

Nearly all those approved went to a few companies that own multiple locations in the city.

Those companies rushed to apply for the licenses when the cap was in the works. In some cases, the establishments aren’t yet built but the plans are underway, said Drew Duncan, a Sioux Falls attorney who represents Commonwealth Gaming and Deuces Casino.

“It's a stranded investment if they don’t get it,” Duncan told the council.

Nearly all the licenses were approved 5-3 with little debate.

The state didn’t intend for video lottery to be the primary — or only — source of revenue for an establishment, Neitzert said.

“I don’t think that the intent of state law was for video lottery to just be a casino, that it should be tied to a restaurant or a bar,” he said. “I think we should support video lottery as accessory use, not as a sole primary use. I don’t think it meets what state law intended and it doesn’t generate us any tax revenue. I think it’s just good policy to encourage giving out our video lottery licenses for restaurants as opposed to free-standing casinos.”