Are snuffed out cigars and cheap MT cigarettes the smoking guns that have doused the dollars spent on gaming in Deadwood? Sen. Tom Nelson, R-Lead, believes so, and in an effort to light a fire toward putting the industry back in the black, will propose legislation that exempts Deadwood casinos from the smoking ban that took effect in 2009, a measure that passed 65 percent to 35 percent on that year’s general election ballot.
“As far as my legislative package goes, there are some things in there that need good discussion,” Nelson said. “I hope our legislators will see their way to help out our local economy.”
Nelson’s proposed exemption legislation reads: “Exceptions to the smoking ban in certain Deadwood gaming establishments and certain fraternal, service and veteran’s organizations,” and is followed up by a summary statement that reads: “Any gaming operator in Deadwood as licensed in 42-7B, PLUS specific fraternal, service or veteran’s organizations with an on sale liquor license shall be exempt from the smoking ban.”
Nelson said his primary goal is to get the exemption for Deadwood, in an effort to revive the sagging gaming economy.
“We now have a year’s worth of numbers to show,” Nelson said. “Every month since the smoking ban took effect, save December, we’ve either been down or flat. It’s partially the economy and yes, tourism is down. But if you look at the numbers just two years ago, Deadwood was consistently growing — 7 to 10 percent up every month. So being down 7 percent, for example, is actually a 14 percent swing. I believe that even if there originally was an exemption for Deadwood on the ballot, it still would have passed. I think there’s a different mindset about Deadwood, an ‘I don’t want it in my backyard, but it’s OK if it’s out there.’”
Nelson said that there is definitely room for maneuvering on the proposed measures. “For example, it may have to be just on the gaming floor only,” Nelson said. “I’ll put it in front of the governor’s staff and anything he can’t live with, we will come up with ways to make more palatable and hopefully, we can work with that as well.”
Rep. Fred Romkema, R-Spearfish, said that shown the numbers, he would support the exemption for Deadwood. “I’ve supported all previous legislation that sought to exempt Deadwood gaming from the smoking ban,” Romkema said. “Given data that would indicate that the smoking cessation or restriction contributed to the economic downturn of gaming establishments in Deadwood, I would support the exemption for Deadwood, segregated areas for smoking.”
Rep. Chuck Turbiville, R-Deadwood, also made a show of support for the measure.
“I support the pending legislation, not because I think we should have smoking in Deadwood,” Turbiville said “but because I look at it as a property rights issue. I think people should be able to do with their property as they see fit. With that in mind, I plan to support the bill as long as it does not go outside the boundaries of Deadwood, only designates casinos and is owner optional.”
Brad Hemmah, general manager of Deadwood Mountain Grand and First Gold said that the smoking ban makes it difficult for Deadwood casinos to stay competitive and would support the proposed legislation.
“I think it’s vital to the competitiveness of our industry,” Hemmah said. “I would support that language. Our competition in Deadwood looks at Deadwood as being one industry in itself, even though there are several owners and operators. We’re trying to compete against other casinos that don’t have the tax burden we uniquely have in Deadwood and it’s hard. It’s difficult to compete. As we go up against other casinos with smoking, including Nevada casinos, we’re having trouble competing. Not only can you smoke there, they have a full complement of games and other jurisdictions don’t have the tax burdens we have.”
Nelson will also propose a handful of other gaming-related legislation, including the following.
• A repeal of the additional 1 percent gross revenue tax imposed on Deadwood gaming.
Nelson will try to get 42-7B-28 repealed, which is a 2009 initiative designed to generate $4 million in additional revenues from Deadwood gaming.
Removing the cap of three retail gaming licenses for Deadwood gaming operators, which would amend 42-7B-26 to allow operator license holders to obtain an unlimited number of retail licenses.
• Eliminate the gross revenue tax in Deadwood being applied to free play, which would involve amending 42-7B-26 so that adjusted gross proceeds shall not include any free or promotional play provided by the operator to a customer that has no cash value.
“For example, we don’t tax farm inputs, such as seed and fertilizer,” Nelson said. “It’s only the final product that’s taxed. Free play is a marketing input.”
• Increase the bet limits on games in Deadwood from $100 to unlimited.
And place a measure on the ballot to expand the type of games offered in Deadwood.
“This obviously requires more discussion, but craps and roulette, primarily, come to mind,” Nelson said.
Non-gaming related legislation that Nelson plans to introduce includes changing some restrictions on personalized license plates to include allowing Gold Star families to display that emblem on motorcycles, Bronze Star recipients to display the appropriate plate and that single numbers or letters (other than one or two) be allowed as personalized plates on either motorcycles or automobiles.
“More than anything, I believe these were oversights when the original legislation was drafted,” Nelson said.
Nelson will also push to allow a refund of permit fee for precious metals mining operations, proposing that the annual permit fee of $50,000 on gold mining operations be refunded (or deducted) from the severance taxes paid if those annual taxes exceed $100,000.
“I feel the permit fee has unintended consequences,” Nelson said. “This was more geared toward uranium operations, more toward exploratory companies. In the case of Wharf, for example, they’re paying an unfair tax. In light of the fact that they pay millions in severance tax, $50,000 on top of that seems petty.”
Finally, Nelson will work to repeal the reduction in state aid to general education funding for any school district that receives proceeds from the Commission on Gaming.
Nelson cited the example of the Spearfish School District which received nearly $300,000 in pro rated gaming funds a couple of years ago. Instead of receiving the gaming funds on top of state aid, the district’s state aid was reduced by the amount they received from the gaming commission, making the fund distribution a “wash.”