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States have authority to legalize online gambling

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South Dakotans who want to gamble have long been able to go to casinos in Deadwood, on Native American reservations or to one of the state's many video lottery establishments.

Now they could be on the verge of a new legal place to gamble: online.

A surprise announcement last week by the U.S. Department of Justice has opened the door for states to legalize online gambling inside their borders. Previously, federal authorities cracked down on Internet gambling, resulting in most of the business going to off-shore companies.

"2012 in essence will be the year of online gaming in America," said Richard Bronson, chairman of the California online gambling company U.S. Digital Gaming. "States and lotteries and Indian casinos and conventional casino operators will be able to expand into online gambling."

Will 2012 also be the year of online gambling in South Dakota?

Some advocates for Deadwood casinos hope not.

"I think it would detract from the critical mass of bringing people to Deadwood to not only enjoy gambling but winter sports, summer sports, Mount Rushmore - the whole visitor experience that happens in the Black Hills," said Sen. Tom Nelson, R-Lead.

It would take a bill in the South Dakota Legislature to legalize online gambling in South Dakota. The Department of Justice's decision also only gives states authority to allow gambling by people accessing the Internet from inside the state. If another state legalizes online gambling, it would still be illegal for people in South Dakota to gamble on those websites.

With less than a week passing since the Justice Department's Dec. 23 announcement, many politicians and people in the gambling community haven't decided what it means.

Norm Lingle, director of the South Dakota Lottery, said in a statement that he is still learning more about the implications of the decision. Larry Mann, a gambling industry lobbyist, said that he has never discussed online gambling with his clients.

"I have absolutely no idea what it could mean," Mann said of the Justice Department announcement.

Gov. Dennis Daugaard wants to learn more about the issue, according to a spokesman.

"The governor feels like any time that the federal government acts to give the states more discretion or authority is a positive step," Daugaard's spokesman Tony Venhuizen said. "Are we going to do anything? Are we thinking about online gaming? He's willing to learn more about that and have that discussion, but he doesn't have any immediate plans to take on that issue."

Venhuizen said any discussions Daugaard has about online gambling would involve the current stakeholders in gambling: the Deadwood casinos, the video lottery establishments and the state's Native American tribes.

In the short time since the Justice Department announcement, several states have expressed interest in legalizing online gambling as a revenue source.

Bronson, whose company provides services to online gambling sites, predicted that South Dakota could see as much as $30 million per year in new government revenue.

He also disputed concerns raised by Nelson that online gambling would harm current casinos.

"This is not like Amazon being able to take business from existing book and record stores, so people say, ‘I'm not going to go to the mall, I'm going to Amazon,'" Bronson said. "I believe the existing stakeholders, the existing gambling interests in the various states, are going to be the ones who are also operating the online gambling."

Nelson is not persuaded. Deadwood gambling benefits not just casinos but hotels, restaurants, ski slopes and other attractions, he said.

"Deadwood is part of a package with the other attractions in the region and the history of the region," he said. "If online gambling ultimately keeps people at home, that detracts from the whole package."

Contact David Montgomery at 394-8329 or


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