Council votes to limit video lottery in Sioux Falls

Megan Raposa -

Simplified: City Councilors voted unanimously on Tuesday to limit the number of places that have video lottery machines, and a separate measure to change a 2019 ordinance that made it easier for casinos to get more video lottery machines under one roof.

Why it matters

  • The cap comes in a proposal from Councilors Greg Neitzert and Rich Merkouris, who recognized a large increase in video lottery machines in the city over the last few years.
  • With the ordinance passed Tuesday, there's now a cap of 186 video lottery licenses in the city – each license means up to 10 video lottery machines. That cap will increase only when population increases by 5,000 people.
  • Additionally, moving forward no more than three connected 10-machine businesses can share refrigerator space and share the same employee.
  • Both measures passed unanimously Tuesday night, but not without some councilors expressing concerns both about what the cap could mean for aspiring small business owners and how the state legislature might respond to Sioux Falls capping potential money flowing into state coffers.
"When you take away a revenue source for the State of South Dakota, I can almost guarantee you the legislature will take a look at it and say, 'You are in our area,'" Councilor Curt Soehl said.

What exactly are the changes?

The first change to pass Tuesday night puts a cap of 186 authorizations for video lottery machine placements – i.e. 186 licenses.

  • That means once they're gone, they're gone until the population grows enough to add more to the pool.

Councilor Neitzert said his hope is this will prevent more casinos from adding more and more machines under the same roof.

"Most of the growth (in video lottery) in the last three to four years has been from the expansion of existing casinos, not the creation of new ones," Neitzert said. "We’re spending most of our time going from 20 to 30, 40, 50 machines rather than creating new business."

The second change was a move to correct some "unintended consequences" – as Councilor Alex Jensen put it – to a 2019 ordinance that allowed multiple casinos to share an employee and refrigerator space.

  • The update means no more than three separate establishments can share refrigerator space or an employee.

These changes won't affect licenses that have already been approved or businesses who already had more than three connected establishments sharing space/employees before Tuesday night's ordinance passed.

  • Much like the "unintended consequences" of the 2019 ordinance, Jensen said there's "likely unintended consequences in the legislation we have passed tonight."

What happens next?

The two ordinance changes will take effect Dec. 4.

It'll be up to the City Council to dole out the remaining video lottery licenses at their discretion.