The State of the Gaming Industry – 2012 – as seen through the eyes of the lottery in Sioux Falls, South Dakota


On Wednesday, June 13th, there was an article in the Sioux Fall Argus Leader that explained gaming economics.  The article contained everything you ever needed to know to understand the state of the gaming industry in 2012; in one short, simple story about the loss of gaming revenues to the city of Sioux Falls, South Dakota, all of the challenges the gaming industry faces everywhere are enumerated.

The article lists the problems the South Dakota Lottery’s video lottery business faces as the recession (2008), a smoking ban (implemented in 2010) and a new casino right across the border in Iowa (Grand Falls Casino 10 miles from Sioux Falls opened in 2011). The Grand Falls Casino has all the same slot machines the lottery offers in South Dakota, but newer and in a place that permits smoking.  The combination of those three factors is proving to be very harmful to the lottery’s business. For ten years the video lottery machines in Sioux Falls generated at least $5 million a month, just like clockwork – but now that has dropped below $4 million.  By most measures the state and the city’s economy is recovering and improving – but gaming is not.  Why not?

Of the three reasons for the decline in VLT revenues, two have remained the same – the smoking ban and new competition.  What is to be done?  Again, this is more than a Sioux Falls story, more than a South Dakota or VLT story – it is an industry story.  The suggestions today concern betting limits; some of the VLT operators think that higher betting limits will help.  In time there will be other suggestions – ways to improve the appeal of the games to current players and broaden the market and attract new players.  For certain, there will also be a renewed effort to amend the smoking ban.  The discussions will include new and different types of games and other wagering options – such as sport betting, they will be looking everywhere for that lost revenue.

In short, VLT operators and their supporters in Sioux Falls will explore all of the options available in today’s gaming market – the current menu of gambling games.  Probably, they will not be able to get authorization for most of their ideas, but they will try. They will try like the governor of New Jersey, New York, Massachusetts and Maryland is trying, they will try like the legislature is trying in Delaware, Rhode Island, New Hampshire and Illinois is trying; they will try like everyone in the industry is going to try in the future to find a way to cope with the new “state of gaming” – where gaming revenues are not growing, regardless of what the economy is doing.

Oh, one more question, when all of the options have been tried, what then?  Well, maybe just one more question, when online gaming hits in full force, what then? A mature industry, fully developed and expanded in all of the potential markets faces very different problems than a growing and expanding industry – or to put it in chronological terms, the 21st century is not like the 20th century.

 Sioux Falls’ Biggest Paydays In Gambling Are A Thing Of The Past.  Net revenue for video lottery machines has skidded below $4 million for most of the past two years with little sign of reversal. Three reasons are familiar. The recession hurt gambling. The smoking ban …approved in 2010 …And Grand Falls Casino opened in mid-2011 across the Iowa border…The economy is improving after the recession, but gambling revenue isn’t…State records show that gross revenue from video lottery in Sioux Falls topped $183 million for calendar 2008. That fell to $177 million in 2009, the bottom of the recession. It fell to $175 million in 2010, the year the smoking ban took effect after the November election. It fell to $147 million in 2011, when Grand Falls opened, and was $63 million through May this year. Jon Walker, Sioux Falls Argus Leader, 6-13-12

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1 Response to “The State of the Gaming Industry – 2012 – as seen through the eyes of the lottery in Sioux Falls, South Dakota”


  1. 1 Suzanne Stormon June 14, 2012 at 9:00 am

    It doesn’t look good for states for states that rely too much on casino profits. It’s not the panacea that it first seemed to be.


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