Deadwood leaders seek larger share of gaming proceeds to fund local preservation and infrastructure; committee defers

Representative Scott Odenbach and Deadwood officials presented House Bill 11 59 to revise how municipal proceeds from gaming are distributed, asking the committee to change a capped allocation and move to a percentage‑based split for the remainder of net proceeds.

Proponents said Deadwood is a small city by population (about 1,343 residents noted in testimony) that generates large tourism and gaming revenues — attendance figures and sales taxes cited were multiple millions per year — and faces unusual infrastructure and public‑safety costs tied to visitation. Kevin Kuchenbecker, planning, zoning and historic preservation officer for the city of Deadwood, summarized the existing distribution formula and figures for fiscal year 2024: Deadwood gaming activity generated $19,279,309 total, of which the 8% gaming tax produced about $11.7 million and device fees about $6.1 million; after administrative set‑asides the city currently receives a capped municipal share of about $6.79 million and a later spill of about $3,027,633 was distributed under the current formula. Under the statute cited in testimony (SDCL 42‑7B‑48.1), the post‑cap balance is currently split 70% to the state general fund, 10% to other municipalities in Lawrence County, 10% to county school districts and 10% to Deadwood. Proponents asked that the percentage allocation at the spill stage be reallocated to give Deadwood a larger share (proposal described as swapping the 70%/10% split so Deadwood receives 70% of that balance).

Supporters argued the capped municipal payment has not kept pace with inflation and that Deadwood funds preservation and tourism infrastructure that benefit the state. Opponents from the Bureau of Finance and Management warned the change would reduce ongoing state general fund revenue — BFM estimated an ongoing loss using FY24 figures of roughly $1.8 million and noted such a shift would create a growing ongoing fiscal hole as gaming revenue increases. BFM also noted that Deadwood already receives substantial sales and use and gross receipts taxes (more than $6 million in FY24) and that the current distribution has produced predictability for budgeting.

Proponents said they were open to phased approaches or other adjustments and emphasized constitutional language requiring net municipal proceeds be devoted to historic restoration and preservation of Deadwood. Committee members asked clarifying questions about the constitution, how the $6.8 million cap was set and whether online/mobile wagering changes would affect the distribution. The committee deferred action and asked sponsors to provide additional analysis and to continue discussions with state agencies.

Ending: The committee deferred the bill; sponsors and agencies were asked to work on alternatives and provide follow‑up information.