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Deadwood, S.D., plays winning hand

$100 bets re-energized town and gave businesses a lift

By James Paton, Rocky Mountain News (Contact)

Published November 8, 2008 at 12:05 a.m.

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Dancers take to the floor at Calamity's Country Bar in the Lucky Nugget during a polka fest in Deadwood, S.D.

Photo by Kristina Barker / Rapid City Journal

Dancers take to the floor at Calamity's Country Bar in the Lucky Nugget during a polka fest in Deadwood, S.D.

Georgeann Silvernail says gambling saved the town.

Photo by Rapid City Journal

Georgeann Silvernail says gambling saved the town.

Ron Osban, of Manderson, Wyo., plays the slots at the casino in the Celebrity Hotel in Deadwood, S.D. Customers have wagered nearly $12 billion in Deadwood since gambling was introduced 20 years ago and have lost more than $1.1 billion.

Photo by Ryan Soderlin / Rapid City Journal

Ron Osban, of Manderson, Wyo., plays the slots at the casino in the Celebrity Hotel in Deadwood, S.D. Customers have wagered nearly $12 billion in Deadwood since gambling was introduced 20 years ago and have lost more than $1.1 billion.

Deadwood's main street is buried under 4 feet snow Thursday. Unable to leave town, visitors had little else to do but gamble.

Photo by James Paton / The Rocky

Deadwood's main street is buried under 4 feet snow Thursday. Unable to leave town, visitors had little else to do but gamble.

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Craig Skinner watched in astonishment as the blackjack player seated to his right rode a lucky streak into a seventh hour at the Silverado casino.

Skinner, a petroleum engineer from Gillette, Wyo., backed away to take a breather, but the other man, a boisterous cattle rancher in a baseball cap, had not finished.

The gambler with a hot hand grabbed another whiskey, dropped a $50 tip on the server's tray and placed three $100 bets on the table as he had done countless times before.

Skinner, 53, laughed and shook his head as the cards were dealt. The man had three more blackjacks.

As morning turned into afternoon on Thursday, the value of the black chips in front of the rancher rose to roughly $7,000. The mounting pile attracted a small audience.

Such wagers were impossible in this Black Hills town until South Dakota voters in 2000 allowed casinos to increase the maximum bet to $100 from $5. A previous effort had failed.

What that means is simple: "You can win more," said Skinner, who was up about $2,000 himself. "And you can lose more."

Many customers like the higher limits. "You think this guy wants to make $5 bets?" Skinner asked as the cattleman played on aggressively, fist bumping the other players.

The casinos are happy with the higher stakes, too, because they translate into increased revenue. If the players stayed long enough, their luck would not last. The odds favor the house.

Customers have wagered nearly $12 billion in Deadwood since gambling was introduced 20 years ago and have lost more than $1.1 billion.

So it is no surprise that the casino operators in three of Colorado's former mining towns wanted to follow their counterparts in Deadwood, population about 1,300.

The industry successfully pushed for an expansion of gambling in Colorado. Voters approved Amendment 50 on Election Day, allowing the residents of Central City, Black Hawk and Cripple Creek to decide whether to raise the bet limit to $100, add craps and roulette and keep casinos open 24 hours a day.

In South Dakota, thousands of people flocked to Deadwood Gulch in 1876 to "try their luck at mining," as the sign on Main Street explains.

Today, they come to hit the slots and tables. Casino revenue in Deadwood has risen steadily over the years and, despite a souring economy, has climbed every month in 2008. Revenue this year is up about 7 percent from a year ago.

Even in a snowstorm earlier this week, which kept plenty of people away from Deadwood, the casinos managed to make at least some money. With Deadwood buried in about 4 feet of snow, hundreds of people were captives with almost nothing to do but gamble. The Holiday Inn across from the Gold Dust was filled with guests, including a busload from Sioux Falls, S.D.

Joseph and Mavis Bernhard, unprepared for a blizzard but ready to spend, pulled garbage bags over their heads as they walked out of the Mineral Palace casino into the night. A fierce gust of wind stung their faces as they happily pondered their next destination on Main Street. They had decided to take a friend's recommendation to travel to Deadwood.

"Loving it," said Joseph Bernhard, a resident of Saskatchewan, who was down slightly and willing to lose up to $800. "If I'm going to be stranded somewhere, this is the place to be."

Clint Mortensen lost a few hands in a row and ran out of $5 chips at the blackjack table down the street at the Gold Dust. The 26-year-old gambler, visiting Deadwood with three generations of his family and celebrating his mother's birthday, stood up to leave.

The dealer said: "You'll probably be back. You're not going anywhere today."

Georgeann Silvernail has not gone anywhere since 1962. She moved to Deadwood that year when her husband took a job at the Homestake Gold Mine. She lamented the bustling community's gradual deterioration in the 1980s and eventually cheered its rise again in the 1990s. As she sees it, the city had no choice but to introduce gambling to save itself.

Since 1989, the inaugural year for the casinos, Deadwood has received more than two-thirds of the tax revenue generated by the casinos, or close to $120 million. That's money the city has used to pay for historic preservation, extra police, roads and other costs.

The tax revenue in Colorado has been distributed differently, with about a fifth of the proceeds going to the communities. Of the additional tax money generated because of the ballot measure, most is set to flow to the state's cash-strapped community colleges.

"The town would have died," said Silvernail, who is a city commissioner. "God bless the people here for having the guts and the courage to say, 'Let's do it.' "

Still, she said Deadwood's rebirth has not come without a cost. Housing prices in and around Deadwood have surged, as homes that not long ago would have been worth about $30,000 now sell for $85,000, she said. As a result, workers often cannot afford to live in town, she said. Others have noted that mom and pop retailers died off.

As for other negatives, such as crime, bankruptcies and addiction, it is not clear whether higher stakes have exacerbated the problems, according to those who follow the industry.

"But clearly it doesn't help" when it comes to compulsive gamblers, said Cheri Johnson, who directs gambling treatment at Behavior Management Systems, which has an office close to Deadwood in Spearfish. "If you suffer from an addiction, with $100 bets, you are going to go for it. You don't have the ability to self-regulate."

Kathleen Christopherson emerged as one of the most vocal critics of boosting the betting limits in 2000. Worried about over-development and the "very destructive effect" of gambling on society, she and her husband set up a booth at the Rapid City, fair, distributed fliers and talked to the media. She boycotted movies starring Kevin Costner, owner of the Midnight Star casino. But Christopherson and other opponents, confronted with a powerful industry, lost the fight.

"They ate us up," said Christopherson, sitting down for lunch at the Millstone in Rapid City this week. "It was very discouraging. There was a big fuss about it in 2000, but it was clear that the people of South Dakota voted for it. They wanted gambling. But now the state government is addicted to the revenue and for now, we're pretty much stuck."

Although Christopherson remains a staunch opponent of gambling, she acknowledged that some of their worst fears have not come true, partly because customers have multiple places across the country to bet. One example is Colorado, which likely will become a tougher competitor. Echoing Johnson, she said the so-called video lottery machines are more of a concern.

Although Christopherson remains a staunch opponent of gambling and believes that Deadwood officials "destroyed the city to save the city," she acknowledged that some of their worst fears have not come true, partly because customers have multiple places across the country to bet. One example is Colorado, which will likely become a tougher competitor. She said the so-called video lottery machines outside of Deadwood are more of a concern.

Black Hawk, Central City and Cripple Creek should not necessarily expect gambling revenue to increase year after year. The Colorado casinos have experienced a slump in 2008 amid a weakening economy, and their rivals in the Black Hills of South Dakota have some advantages, including the HBO series Deadwood. This is where Wild Bill Hickok was shot in the back of the head during a poker game in 1876.

Higher stakes alone are unlikely to drive revenue dramatically higher in Colorado.

Most of the customers in Deadwood, like Dave and Elaine Hudson from Wisconsin, said they stick to modest bets. The retired car dealer and his wife played $1 slots mainly as they celebrated their 45th wedding anniversary.

"She loves the slots," he said.

But the ability to put down $100 bets has added energy to Deadwood and given business a lift in South Dakota, and it should have an impact in Colorado, too.

Skinner, one of the blackjack players betting $100 a hand at the Silverado, said he has encountered a lot of Coloradans in Deadwood, but "now a lot of that money will stay in Colorado."

Deadwood by the numbers

* $12 billion: Roughly the amount wagered since 1989.

* $1.1 billion: Approximate amount of money gamblers have lost and casinos have gained since 1989.

* $120 million: About the total amount of tax proceeds that have flowed to Deadwood since 1989.

* $14.3 million: Casinos' revenue in the first year.

* $101.5 million: Casinos' revenue in the latest year.

* 45: Number of gambling locations in the first year.

* 136: Number of gambling locations in the latest year.

Colorado's Amendment 50

* What it will do: Give Central City, Black Hawk and Cripple Creek the ability to raise bet limits to $100 from $5, add craps and roulette, and keep casinos open 24 hours a day.

* What now: The voters of those three former mining communities will cast ballots to decide whether to implement those changes.

* Who benefits other than the casinos: Colorado's community colleges would get most of the additional tax revenue generated as a result of the expansion.

Comments

  • November 8, 2008

    3:29 a.m.

    Suggest removal

    roger44 writes:

    They never mentioned as to whether they had a smoking ban in the joints, but bet they don't, Colorado has a habit of shooting themselves in the foot. And S. Dakota has a lot more casinos, people like to wander around in a gambling town. Also didn't mention what the tax rate was, probably lower than Colorado, and when that is entered into the mix, the joints pay out better on the slots, depending on what the state law is on them. Nevada tax is 12% lower than Colorado, so your odds are much better there. get a book and study basic strategy in blackjack and that will help your odds also, casinos love gamblers who don't know how to play smart.

  • November 8, 2008

    7:53 a.m.

    Suggest removal

    rellimpank writes:

    ---there is a group of busybody,other peoples business minders, based in Rapid City, working toward a smoking ban right now---(I am a lifelong non-smoker)--the nanny state must march forward--

  • November 8, 2008

    7:59 a.m.

    Suggest removal

    Gonzopozo writes:

    Roger44 makes some excellent points. I was just in Deadwood and no, they do NOT have a smoking ban. Makes a big difference. People are still complaining about it in the Colorado towns. Deadwood manages to prosper even with small casinos in Rapid City. In Deadwood there are many small casinos (low machine counts) and the large ones have lots of "wide open floor spaces" which implies the per machine tax rates are high, but who knows.

    I supported A-50. Gaming is a business (9000 jobs in Colorado) and our laws should NOT limit their ability to compete with Vegas, Deadwood, and even Kansas City.

  • November 8, 2008

    8:58 a.m.

    Suggest removal

    PonchoVia writes:

    This is all you need to know about gambling:

    "The odds favor the house." = In the long run, the customer loses.

  • November 8, 2008

    12:40 p.m.

    Suggest removal

    market_man writes:

    When exactly would this new change take place?

  • November 8, 2008

    8:59 p.m.

    Suggest removal

    rezdawg8 writes:

    I'm no saint, but when did gambling become ethical in the minds of most people? And isn't money the root of all evil?

  • November 8, 2008

    11:40 p.m.

    Suggest removal

    Gonzopozo writes:

    The changes, after approval of the 3 local towns, will be effective July 1, 2009. Seems like approval is a given except for possibly Central City where there is a strong base of long-term citizens who aren't that thrilled with 24/7 operations.

    Rezdawg8 - was gambling EVER considered un-ethical? It's just entertainment (at least to most of us).