South Dakota voters could decide whether they want their state to join others across the country that are moving to legalize betting on sports following a U.S. Supreme Court decision this year.

That decision in Murphy v. National Collegiate Athletic Association overturned a 1992 federal law that prohibited bets on football, basketball, and other sporting events, leaving states to decide whether they want to create systems to legalize and regulate the widespread black market of sports betting. A handful of states that already offered sports betting prior to the 1992 federal law were grandfathered in, and now others are rushing to join them.

The Deadwood Gaming Association has filed paperwork with the Secretary of State’s Office to bring a constitutional amendment that would add sports betting to the list of games already offered in the town’s casinos, including card games, slots, keno and craps. If voters allowed Deadwood to offer sports betting, the state’s tribal casinos would also be permitted.

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Roger Tellinghuisen, who represents the association, said the town’s casinos view sports betting as a tool to boost tourism as opposed to netting huge new revenues. Sports betting could entice more people to visit the city or stay an extra night in Deadwood, which fills hotels and restaurants.

“The people I represent recognize that it’s not likely to be a huge money maker,” said Tellinghuisen. Estimates put the actual revenue from betting at about $1 million a year split amongst the town’s casinos, but Tellinghuisen added, “We don’t have any scientific way to gauge that.”

But Deadwood’s vision for a limited, near monopoly on legal sports betting in South Dakota could have competition. Other states are rolling out betting through their state lotteries, opening up betting statewide. It’s a prospect that could have support in South Dakota, especially because it would bring a boost in state revenues.

David Gale, the executive director of the National Association of State and Provincial Lotteries, said in an email that it’s too early to know how many lotteries are planning to offer sports betting.

Charles McIntyre, the executive director of the New Hampshire Lottery, said lawmakers there are talking about expanding that state’s gambling options to include sports betting. State lotteries are ideally positioned, he added, because they already have a large footprint.

“We sort of have a built-in sales force,” he said.

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Like gambling in general, each state is charting its own course when it comes to sports betting, McIntyre said. Some will want to maximize the potential while others, like Utah, where there isn’t a lottery, won’t touch it.

“It’s just a state decision,” he said. “Do you want the revenues or not?”

How much revenue? That’s a point of debate. The American Gaming Association estimates that American make $150 billion a year in illegal wagers. Legalizing and regulating the market would generate tens of billions of dollars in economic development and $4.8 billion to $5.3 billion a year in additional tax revenues for federal, state, local and tribal governments.

But others argue those numbers could be inflated. Following the Supreme Court decision this year, Howard Glickman of the Urban Institute suggested that states which pursue sports betting will see revenue increases, but not big ones. Much will depend on how states tax betting and at what rate. He noted that Nevada – one of the states grandfathered in before the 1992 federal law that was struck down – took in only $15 million in tax revenues in 2017 on $5 billion in bets.

Revenues will also depend on how widespread states allow betting and whether the vibrant illegal market continues.

In South Dakota, Deadwood casinos pay 9 percent of their revenues in taxes. Of that, 1 percent goes to the state general fund.

“If you’re only betting in Deadwood, it’s pretty limited,” McIntyre said.

Delaware – another state that had been grandfathered in before 1992 – allowed parlay sports betting at its three casinos in 2009. In 2012, the state began gradually expanding parlay betting to its lottery retailers. From 2009 to 2018 the state’s share of sports betting revenue increased from $1.5 million to $9 million.

The map below shows the landscape for sports betting immediately after the May 2018 Supreme Court decision:

“Allowing parlay betting among retailers has been very profitable,” said Vernon Kirk, the director of the Delaware Lottery.

Since the Supreme Court ruling this year, Delaware has expanded to allow straight bets – bets on single games – at its three casinos. It also allows betting on other games besides football.

“We were surprised that baseball did as well as it did,” Kirk said.

The retailers, meanwhile, are still only allowed to sell parlay bets of a minimum of three games per bet. Besides pro football games, retailers have been allowed to sell bets on college football games. It’s unclear what the expansions will mean for the state.

“We don’t have a full year of full-scale sports betting under our belt,” Kirk said.

In South Dakota, one possible way to open sports betting would be to allow wagers through video lottery terminals, which are spread across the state. But that’s a scenario that the Deadwood Gaming Association would oppose.

Tellinghuisen argues that allowing sports betting through the lottery would be harder to regulate and open up video lottery to criticism about problem gambling.

“I can’t argue there wouldn’t be more revenue to the state,” he said. “But the move you bring up with video lottery, you’re bringing up all of the objections to video lottery as a whole.”

“At least by containing it in Deadwood, it’s just one of several games offered,” he added. “I don’t think there’s as big of an outcry about problem gaming.”

The Deadwood Gaming Association is taking its case directly to voters by collecting signatures to put the issue on the 2020 ballot. Other groups could also make a bid to open betting to the entire state with competing proposals. Or, the South Dakota Legislature could also put a measure on the ballot.

State Sen. Jim Bolin, a Republican from Canton, thinks a measure allowing sports betting would have a hard time passing the Legislature. In the last legislative session, the Senate voted down a proposal that would have allowed voters to decide whether Yankton could have a casino. That measure, Bolin said, was killed by a diverse coalition of senators that wanted to protect Deadwood, Indian casinos and anti-gambling lawmakers.

“The Legislature could put a constitutional amendment on the ballot,” Bolin said, “but I’m not sure with the current makeup of the Legislature that it would pass.”

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