Deadwood's bet on gambling pays off

In the 1980s the historic city of Deadwood appeared to be dying a slow, painful death in the Black Hills of western South Dakota.

The local economy, which depended heavily on mining, the timber industry, tourism and retail trade, was in decline.

Many buildings in the onetime gold rush town were in disrepair and historic preservation of the structures was unaffordable. Some old buildings were demolished. Others, like the Syndicate Block, burned down in a December 1987 fire after the city’s aging water system failed to produce sufficient water pressure to adequately fight the fire.

In 1989 the city rolled the dice, betting that legalized gambling would help revitalize the once rough-and-tumble outpost whose colorful figures included Wild Bill Hickock, Calamity Jane and Wyatt Earp. This month the city is holding a series of events to commemorate the 20th anniversary of legalized gaming in Deadwood, which has transformed the look and feel of the city while helping to preserve its history.

When the state approved changes to its constitution that made gaming legal in Deadwood in 1988, the new enterprise was anticipated to bring in about $100,000 a year. But a staggering $145 million was wagered during the first eight months of gaming alone, netting $13.9 million in revenue.

“Gaming has proven to be successful for Deadwood and South Dakota,” says Lee Harstad, marketing director of the Deadwood Chamber of Commerce. “When limited stakes gaming was legalized in Deadwood, it was one of three locations across the country offering gaming. The others were Las Vegas and Atlantic City. Since then more gaming facilities have sprung up around the country. Among the big advantages Deadwood has over other gaming communities are the town’s rich history and the Black Hills surroundings.”

Thousands of jobs have been created by the gaming industry in the Deadwood area in the last two decades.

The once sleepy streets of Deadwood are busy again and historic preservation and renovation projects have brought life back to the city that was incorporated in 1876 after the discovery of gold and named for the dead trees found in narrow Deadwood Gulch. Today, historic Main, Sherman and many other city streets have been built up the steep sides of the gulch.

From late 1989 through February, gambling in Deadwood raised $1.1 billion in revenue and generated $88.6 million in tax revenue distributed to state and local governments and aided tourism promotion and historic preservation.

Gaming revenue in fiscal year 2008 reached nearly $16 million, according to the South Dakota Gaming Commission. Approximately half the revenue goes to the City of Deadwood. The remaining funds are distributed to Lawrence County, school districts and other municipalities, South Dakota’s tourism office, the state’s general fund, South Dakota’s historic preservation office, the state’s department of human services and expenses related to capital equipment and administration.

TOURISM IMPACT

Melissa Bump, director of the South Dakota Office of Tourism, says gaming taxes are a significant source of revenue for her office. “These dollars make it possible to better promote the state,” she says. “Every visitor dollar spent in South Dakota feeds into local communities.”

Bump says interest in South Dakota historical sites has significantly increased in recent years.

“Travelers from Germany and Japan are especially interested in our Old West, Native American, homesteading and pioneering history,” Bump says. “They seek out preserved historical sites such as Fort Sisseton, Laura Ingalls Wilder’s homestead and Deadwood.”

Officials estimate each visitor to the state adds approximately $125 to South Dakota’s gross state product and generates more than $75 in wages paid directly to workers employed in the tourism industry.

“Despite the current economic climate, we’re using gaming funds to buck nationwide tourism trends,” Bump says. “In 2008 visitor spending continued to grow. Initial reports for 2009 from all regions in South Dakota indicate positive growth in visitation and spending.”

GAMING FUNDS RENOVATION EFFORTS

In addition to adding tax revenue to the state’s general fund, gaming revenue has generated more than $2 million for historic renovation every year since 2002. Historic preservation projects funded by this year’s Deadwood Fund matching grant program include the Hermosa Masonic Lodge, Homestake Opera House in Lead, Mobridge’s Scherr-Howe Arena, Vermillion’s Washington Street Arts Center, Turton’s First Congregational Church and Alcester’s Star School.

Deadwood Historic Preservation Officer Kevin Kuchenbecker says the continued restoration of local sites plays a key role in attracting visitors to the city.

“We’ve restored a number of local buildings, the cemetery, city hall and other local sites,” he says.

Sorensen is a Yankton, SD-based freelance writer. She can be reached at sorensenlms@gmail.com.