PIERRE | After a discussion on whether it represented an expansion of gambling, a bill to allow penny bets at video lottery establishments is on the way to the governor's office.

The House of Representatives voted 39-28 Thursday for the change, which means SB52 now goes to Gov. Dennis Daugaard, who is expected to sign it into law.

The proposal came from the state Lottery Commission, whose members are appointed by the governor.

“Win, lose or draw it’s going to make more money for gambling. That’s the bottom line,” said Rep. Dan Kopp, R-Rapid City, who opposed the bill.

That's the point, said Rep. Dick Werner, R-Huron. He said the penny will allow South Dakota to be attractive for manufacturers of gambling terminals and that will be good for business.

“We’re trying to keep the games fresh and entertaining,” Werner said.

State government receives half of the money lost by players at video lottery establishments. Revenue plummeted after voters upheld the smoking ban three years ago. The state’s share peaked at $112 million during the 2008 fiscal year. It is estimated to be $95 million this fiscal year, which ends June 30.

Werner said adding the penny credit doesn’t expand gambling since the top prize stays at $1,000.

“This is one penny, one penny. This is not about expansion of gambling,” he said.

Rep. Mike Verchio, R-Hill City, opposed the change, saying it could encourage “granny” to gamble.

A similar argument came from Rep. Steve Hickey, R-Sioux Falls, who said the penny bet could entice more people.

“I look forward to the day we’re not dependent on it. We absolutely are right now,” he said.

Video gambling terminals operate on credits purchased when players insert money. The credit amounts currently are five cents, 10 cents and 25 cents. A maximum bet of $2 is allowed.

Players who want to cash out receive paper slips showing the amount of the remaining credits. The establishments then pay off the slips in cash.

Rep. Roger Solum, R-Watertown, said the penny gives “granny” a choice to bet a lesser amount. “No, it’s not an expansion,” he said.

That didn’t convince Rep. Manny Steele, R-Sioux Falls. He said the fact that video gambling businesses support the change is telling.

“It appears to me there apparently will be revenue raised by this or they wouldn’t be for it,” he said. “I believe this does expand it.”

Rep. Marc Feinstein, D-Sioux Falls, asked whether a player will be able to put a single penny into a machine.

“No, they will not,” Werner replied. “The new machines won’t accept anything but currency.” He added, “You can play a penny once you put it (a bill) in.”

Feinstein said if that’s the case, he can agree it’s not expansion.

Rep. Jim Peterson, D-Revillo, said the Lottery Commission members are trying to “make a partnership with the businesses that are providing this service to us, and it is a service.”

“I know there is opposition to gambling. But don’t make this a referendum on gambling,” said Peterson, who added that the establishments will still be limited to 10 machines.

Werner and Peterson are former members of the state commission.

Legislators shouldn’t confuse the issue, said Rep. Charlie Hoffman, R-Eureka. He said a bill to allow more machines last year was killed, while an increase to $1,000 for the bet limit passed, which was an expansion.

Hoffman said he has “a hard time wrapping my mind around” how allowing penny bets is an expansion.

“Gambling is made primarily to lose,” said Rep. Scott Craig, R-Rapid City. While he accepts that people can choose to lose their money, he said he doesn’t like state government gaining from their losing.

Some people will still lose their paychecks regardless whether the penny bet becomes legal, said Rep. Tim Rounds, R-Pierre.

“We’re not voting up and down on gambling. If we did that, we’d have to talk about the stock market,” he said.

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