South Dakota green-lights sports betting regulations

South Dakota is now a step closer to rolling out regulated wagering following the approval of sports betting rules by the state’s regulator.

In a meeting held last week, the South Dakota Commission on Gaming revised and approved a set of regulations that will govern legal sports betting in the jurisdiction.

The changes included removing a clause proposing the deduction of federal excise tax when calculating an operator’s adjusted gross revenue, as the Deadwood Gaming Association had earlier propositioned. However, free play is still up for deduction.

The rules also include a requirement for regular inspection of sports betting equipment records, as well as language prohibiting suppliers of gaming equipment from partaking in specific wagering activities.

The next step for the proposed regulations is consideration by the Interim Rules Review Committee on August 2.

The Commission will then meet on September 8 to approve operator licenses ahead of the scheduled launch on September 9.

License fee and tax rates for sports betting operators

The rules approved by the SD Commission on Gaming set the initial application fee for permits at $5,000.

This amount will be non-refundable, and it will be paid to the Commission by operators interested in offering wagering in the precinct to facilitate background checks. The costs covered will include out-of-state travels and inspection of sports betting equipment records and surveillance methods.

Successful applicants will pay an additional $2,000 in permit fees to the Commission before commencing operations. The licenses will be subject for renewal on every July 1 at the same cost.

Regarding the tax rate, all licensees will be required to remit 9% of their adjusted gross revenue to the Commission every month. The revenue will be calculated by deducting free play from an operator’s total hold.

According to the Commission, just under 10 applicants have submitted their license bids for vetting since the regulator announced the request for applications on July 1. However, the body has not revealed the names of those companies.

The vetting process is currently underway.

South Dakota sports betting at a glance

The journey towards legalizing sports betting in the Mount Rushmore State began in November 2020, when citizens approved the market by ballot initiative with a vote of 58.5% to 41.5%.

In January this year, the state lawmakers introduced SB 44 in the Senate in a bid to authorize gambling on sports, and the bill cleared both houses with little objection in early March. Governor Kristi Noem signed the bill into law on March 29, paving the way for the SD Commission on Gaming to start regulating the market.

SB 44 authorizes betting on sports in the historic City of Deadwood, since it is the only region where casinos and other forms of gambling are allowed in the state.

Under the law, casino operators in the city can apply for permits to run physical sportsbooks inside their establishments. Online wagering is also allowed via mobile apps as long as patrons place bets within the licensees’ premises. However, bettors will be required to register in-person at the casinos before they can place bets on mobile.

South Dakota sports betting law allows sportsbooks to offer wagers on both professional and collegiate sporting events, as long as an in-state college is not participating. Betting on high school events or minor leagues is prohibited.