South Dakota governor signs bills to boost Deadwood gambling revenue and allow cigar bars

South Dakota Governor Larry Rhoden has signed three bills aimed at boosting economic development, including measures to increase gambling tax revenue for Deadwood, permit more cigar bars and allow cities to temporarily raise sales taxes.

The Republican governor said the legislation aligns with his “open for opportunity” policy framework. “I am committed to keeping our communities strong and South Dakota Open for Opportunity and that is exactly what these bills do,” Rhoden said in a news release.

All three measures will take effect on July 1.

One of the bills revises how gambling tax revenues generated in Deadwood the only location in the state outside tribal land where full casino-style gambling is permitted are distributed. The changes remove a $6.8 million cap on the city’s share of certain revenues and adjust how remaining funds are allocated.

Under the new formula, a larger portion of remaining revenue will be directed toward Deadwood historic preservation efforts, with a reduced share going to the state’s general fund and the rest allocated to other local entities, including municipalities in Lawrence County and the Lead-Deadwood School District.

Had the changes been in place last year, Deadwood’s share would have increased from $7.13 million to $7.29 million. State officials and local lawmakers said the additional funding is expected to support infrastructure improvements.

Rhoden said the revised distribution would help ensure that Deadwood “can continue to grow, thrive and support” the state’s economy.

The package also includes legislation allowing cities and counties to issue licenses for additional cigar bars, expanding beyond the limited number of establishments that were allowed to continue operating under the state’s indoor smoking ban, subject to certain requirements.

A third measure enables municipalities to introduce a temporary sales tax of up to 1% to fund major projects, subject to approval by at least 60% of voters. The tax will expire once the required funds are raised or after five years, whichever comes first, and cannot be reintroduced for at least two years.

According to the news release from Rhoden’s office, the provision is intended to “encourage local communities to plan responsibly and remain Open for Opportunity.”