In 1989, Deadwood, S.D., was a town with a rich history but an uncertain future. The city’s economic mainstays – mining, timber and tourism – had been declining for years. Its historic buildings were crumbling.
Deadwood decided to take a gamble on gaming. Limited stakes slot machines, blackjack and poker became legal in the city on Nov. 1, 1989. At the time, it was an experiment in economic development, something no city outside Nevada and Atlantic City, N.J., had done.
“We really didn’t know what to expect,” said businessman Tom Blair, who was Deadwood’s mayor at the time. “We hired an economist to research the possible impact. He found a town in the Yukon Territory, Dawson City, that had some gaming, and based on that he thought we’d maybe do $100,000 the first year.”
In just seven months, Deadwood’s gaming revenue totaled $14 million.
Now, on the 20th anniversary of Deadwood’s gamble on gaming, the city looks back on an industry that has produced $11 billion in bets, $1 billion in revenue and millions of dollars in historic preservation projects. The city’s boom in hotel and resort construction continues in 2009.
Industry veteran Tom Rensch, managing partner of the Silverado-Franklin Historic Hotel & Gaming Complex, said he’s still amazed by the success of Deadwood gaming and historic preservation during his 20 years in the business.
“It’s been an unbelievable journey,” Rensch said. “We’ve saved a national historic landmark. When people come here, they can see what 20 years of gaming has done – and we have a lot left to do.”
A history of gamingIn some ways, gaming is a good fit for Deadwood. Its most famous resident, gunfighter Wild Bill Hickok, arrived in 1876 to prospect for gold and play poker. His luck, however, was not good. Just three weeks after he got to town, Hickok was gunned down during a poker game at the Saloon No. 10. He was holding two pair, aces and eights, forever known as the Dead Man’s Hand.
Games of chance flourished in Deadwood’s bars and saloons more or less openly right up until the 1940s, when law enforcement and public opinion both turned against gambling. (Deadwood’s houses of prostitution stayed in business until 1980.)
By the late 1980s, Deadwood’s economic fortunes had taken a downward turn. The entire city had been listed on the National Register of Historic Places in 1961, but there was little historic preservation going on. In 1987, a fire destroyed the historic Syndicate Block in downtown Deadwood. The fire raged in part because the city’s outdated water system couldn’t produce enough pressure to subdue the flames.
The fire galvanized the community. A year later the Deadwood You Bet committee launched a statewide political campaign to bring gaming to Deadwood. In the fall of 1988, South Dakota voters approved the measure.
A new era of gamingWhen the first slot machines sprang to life on Nov. 1, 1989, there was so much pent-up demand that people actually waited in line to play. In its first eight months, total gaming action in Deadwood was a whopping $145.5 million. In the first full year, between July 1, 1990, and June 30, 1991, bettors wagered $330 million.
Not long after Deadwood casinos opened their doors, jurisdictions in Iowa, Colorado, Illinois, Mississippi, Louisiana, Missouri and Indiana followed suit. About the same time, many of the nation’s 545 American Indian Tribes, empowered by the 1988 Indian Gaming Regulatory Act, began opening casinos of their own.
Despite this competition, Deadwood’s casinos continue to attract gamblers. In all but two of the past 20 years, gaming revenue has increased year-over-year.
Today Deadwood has more than 3,900 licensed gaming devices – poker tables, blackjack tables and slot machines – in 139 casinos and gambling halls. Meanwhile, the number of hotel rooms, restaurants and other visitor facilities has mushroomed since 1989. In fact, today the town of 1,300 people has about 1,300 hotel rooms.
Slots are still kingSlot machines remain the game of choice for Deadwood’s gamblers. Ranging from penny slots to $25 machines, slots today account for 97 percent of Deadwood’s gaming devices and 92 percent of its revenue, according to figures from the South Dakota Commission on Gaming.
“Slots are by far the most popular game in Deadwood. A lot of it has to do with the fact that we have fewer options with table games than other areas do,” said Ken Gienger, president of the Deadwood Gaming Association and general manager of the Celebrity Hotel. In addition, he said, Deadwood visitors are generally recreational gamblers who prefer the casual play of slot machines.
“Slot machines are the mainstay, and they always will be,” said Silverado’s Rensch.
Rensch said slot machine technology has evolved over the past 20 years. When Deadwood gaming began, he said, the machines were simple. They cost $2,000 each, operated by traditional spinning reels and dumped coins into hoppers. Today, machines cost $20,000, and they offer multidenomination, multiline play with video screens and ticket printers, rather than coin payouts.
And among slots, penny machines of the denomination of choice in Deadwood. Nearly 65 percent of the city’s more than 3,800 slot machines are penny machines. Gienger said the penny machines are popular because they are so versatile. Players can pick any amount to wager, and they can play in a variety of ways. Gienger said the penny slots have been available for probably a decade, but their popularity has soared in the past three to five years.
What's next?As Deadwood heads into its next 20 years, gaming-related growth continues. Two major construction projects are under way in 2009.
The Lodge at Deadwood is scheduled to open in the fall of 2009. The $47 million resort has 140 guestrooms and suites, a water park and 16,000 square feet of meeting space.
And work continues on the Deadwood Mountain Grand Hotel & Casino in downtown Deadwood. A group of investors – including Nashville star Big Kenny Alphin of Big & Rich fame – is turning the historic “slime plant” into a $40 million gaming and entertainment complex. (It was called the slime plant, because the building’s original job was to extract gold from muddy slurry pulled from the Homestake Mine in nearby Lead, S.D.)
Meanwhile, competition from other gaming jurisdictions continues. Last fall, Colorado upped the ante by raising bet limits to $100 – Deadwood’s bet limits went to $100 in 2000 – and allowing new games such as craps and roulette.
Deadwood’s gaming industry, at least for now, doesn’t seem interested in adding new games. Gienger said he hasn’t heard any conversations among casino operators about introducing craps or roulette. Rensch said new games could be added at some point, but there are no current plans to ask South Dakota voters to approve new games.
Deadwood stays competitive, in part, by promoting its Wild West history – HBO’s gritty “Deadwood” series was a public-relations bonanza – and staging regular events such as street concerts, Wild West memorabilia auctions and fast-draw shooting competitions.
“I’m pleasantly surprised by what has happened in the past 20 years,” said former Mayor Tom Blair, who now owns a Deadwood campground. “There have certainly been some bumps in the road, but I don’t’ think anybody could have predicted back in 1989 what Deadwood would become.”
SIDEBAR: Aces and Eights: About Deadwood• The town’s population is 1,300 residents; its total number of hotel rooms, 1,300.
• Deadwood’s most famous dead person: Gunfighter Wild Bill Hickok, who was gunned down in 1876 during a poker game in Deadwood’s Saloon No. 10. He was holding two pair – aces and eights, now forever known as the Dead Man’s Hand.
• In 1961, the entire town of Deadwood was listed on the National Register of Historic Places.
• In 1988, the Deadwood You Bet committee begins effort to legalize gaming. The push comes a year after fire destroys the town’s historic Syndicate Block, partly because of outdated water system. Voters approve gaming measure in November 1988. On Nov. 1, 1989, Deadwood’s first slot machines begin operating.
• Number of slot machines, poker tables and blackjack tables: 3,900, 97 percent of which are slots
• Number of casinos and gambling halls: 139
• Total amount wagered first full year (July 1, 1990 and June 30, 1991): $330 million
• Total amount wagered since legalization: about $11 billion.
• Gaming revenue earned since legalization: $1 billion. Millions of dollars have been invested in historic preservation projects.
• New projects under construction: 2. They are the Deadwood Mountain Grand Hotel & Casino, $40 million gaming and entertainment complex backed by a group of investors, including Nashville star Big Kenny Alphin of country music duo Big & Rich; and The Lodge at Deadwood, $47 million resort with 140 guestrooms and suites, a water park and 16,000 square feet of meeting space.