South Dakota Seeks to Distribute Casino Tax Revenue for Public Works

South Dakota Republican Governor Larry Rhoden has signed Senate Bill 102, which changes how gambling tax revenue from Deadwood is distributed. The revision redirects a portion of funds from the state to the city of Deadwood – the only location in South Dakota, aside from tribal lands, where full casino-style gambling is permitted.

Governor Signs New Law

The new law would set a cap on taxable gaming revenue in Deadwood, which exceeded $150 million last year. A portion of those funds would be redirected toward initiatives such as road upgrades, broader infrastructure projects, and efforts to expand industries beyond gaming, according to a city historic preservation official. Rhoden said the change would help ensure Deadwood can continue to grow, prosper, and contribute to South Dakota’s economy.

Deadwood has historically relied heavily on its gaming sector, which saw significant growth in 2023 and 2024. The new bill aims to diversify the local economy by channeling gaming revenue into infrastructure and supporting the growth of non-casino businesses. Estimates suggest the measure could boost Deadwood’s annual budget by approximately $800,000. 

Where Will the New Revenue Go?

Most of the revenue is currently allocated among several recipients, including Deadwood’s historic preservation fund, the state tourism fund, the state Gaming Commission, the state general fund, Lawrence County, a statewide historical grant fund, and a state gambling addiction program. Deadwood’s portion from this initial distribution is capped at $6.8 million. Once those allocations are made, 70% of the remaining revenue goes to the state general fund, while the remaining 30% is divided among local governments in Lawrence County and historic preservation efforts in Deadwood.

Under the new law, Deadwood’s $6.8 million cap in the first phase will be removed, and the distribution of the remaining funds will be adjusted. The updated formula directs 71% to Deadwood’s historic preservation efforts, 25% to the state general fund, and the remainder to other municipalities in Lawrence County and the Lead-Deadwood School District.

It should also be noted that Gov. Rhoden also signed House Bill 1215, which allows counties and cities to issue licenses for cigar bars. Previously, in 2010, South Dakota voters upheld a ban on smoking inside public buildings, restaurants, casinos, and bars.

The ban permitted the three existing cigar bars in Sioux Falls, Rapid City, and Deadwood to remain open, provided they met specific requirements. However, the new law now gives cities and counties the authority to issue licenses for additional cigar bars.