Casinos, video poker and sports betting: What would legal gambling look like in SC?

There was a time not long ago you could legally gamble in South Carolina.

Video gambling took South Carolina by storm during the 1990s. According to reports from 1999, there were over 29,000 machines operating across the state.

Horry County and the Grand Strand led the state in most money spent at these video portals that same year, with $88 million in gross receipts during just three months.

Ultimately, regulating online gambling proved tough. The state legislature passed a bill that would ban video gambling unless a referendum showed public support in June 1999.

Months later, the South Carolina Supreme Court killed the referendum vote and deemed gambling unlawful, leaving the Grand Strand with casino boats that operate on the open seas.

Today, however, former South Carolina Superintendent of Education Jim Rex believes past mistakes could be avoided and it’s time to take another look at legalizing gambling.

The future of betting could see new light thanks to a group of former lawmakers and citizens launching a self-funded investigation into gambling as a new way to make money. Calling itself the Palmetto Forum for Gaming Studies, the hope is to research the topic’s pros and cons.

Rex is a part of the forum. He is looking at gambling not as an advocate for the industry but as a citizen trying to find ways to bring economic development to the state.

Tax increases are politically hard to accomplish in the statehouse, Rex said, so gambling could be a new way to make money for programs like education, public safety or elderly care.

“We’re not going to see any big tax increases soon, so where can we find alternative revenue sources?” Rex asked.

Alternative revenue

Hypothetically, legalized gambling could increase revenue through payout fees or taxes levied on casino operations. This line of thinking is not without precedent.

Currently, passengers on casino boats pay a $7 boarding fee to Horry County Government. In June, county council raised this fee to $10 starting in 2020. This move will bring in an estimated $100,000 a year, according to information provided to council during the budget process.

In addition to other fee increases, this money was used to increase salaries for public safety officers.

The South Carolina Education Lottery is a form of legalized gambling that benefits schools and universities. Since its start in 2002, it has appropriated $4.4 billion to higher education and $960 million to K-12 education, according to the education lottery website.

Rex said while the money raised through the education lottery has done a lot of good, it is his opinion that it has also taken on too much of a role in funding state education. This has led to South Carolina higher education not seeing necessary increases in state appropriations, he said.

“It has supplanted education funding,” Rex added.

Former State Treasurer Converse Chellis said he doesn’t know if he supports legalizing gambling. As a conservative, he sees potential for some good to come from gambling that could help avoid burdensome tax increases.

With online sports gambling becoming more popular, South Carolina needs to make sure it is the one repeating the benefits from taxes and fees on gambling, Chellis said.

“If South Carolina doesn’t control the money, someone else is going to get it,” he said.

Making sure government money is spent as it was intended is a priority for State Rep. William Bailey of Little River. He said you always hear the story of governments finding new revenue streams but ultimately not using it effectively. Before he would support any changes to the gambling laws, he wants to make sure public money is protected.

The problem both Chellis and Rex saw was the potential for abuse or corruption coming from the new money. Rex said one part of the Palmetto Forum is to learn from past mistakes and identify ways to make the gambling industry as transparent as possible.

Rex suggested regular, independent reports and public audits to provide state lawmakers oversight on the gambling industry to avoid distrust and misuse of the system.

Casinos in a resort town

The Grand Strand is one of the most visited locations in South Carolina and could be a prime place to put a casino, said Scott Malyerck with the Palmetto Forum.

“When we talk about the possibility of instituting a casino in South Carolina, a lot of people point to the Grand Strand,” he said.

It’s one of the reasons the forum met in Little River this week, the first of many such meetings. Local officials, business owners and chamber of commerce members attended the event.

Bailey said it’s hard to know if gambling would benefit Horry County because of the many different types of gambling.

“I think a lot of it would depend on what kind of establishment we’re talking about,” he said.

Gambling can mean a variety of things: casinos, online gambling and sports betting ranging from gas station poker machines to high-end casinos that offer some of the most luxurious accommodations in the country.

Just recently, Boston saw a $2 billion investment on its harbor by the Encore Boston Harbor Casino. The casino is high end and is promising donations to support community programs.

More casinos could prove problematic for folks struggling with gambling addiction, which is an issue Rex said would have to be addressed.

The National Council on Problem Gaming defines gambling addiction as causing harm to personal finance, relations and quality of life due to betting. It said about 1 percent of the U.S. population struggles with gambling addictions.

Chellis said he too is concerned at what type of gambling would come to South Carolina. He added that he would not support anything that takes away from the family values of the Palmetto State.

“I’m not looking to ruin our southern hospitality,” he said.

For or against

If any decision is to be made on the matter, it would have to be done on the state level. A bill was filed in the South Carolina House and Senate in 2018 that would loosen regulations against gambling, but both have been stuck in committee for two legislative cycles.

Bailey said it’s probably going to take an outpouring of community support to get the Horry County delegation to the Statehouse on board with legalizing gambling. While he isn’t totally against it at this time, he has too many questions that need answers.

“I’m open-minded but very skeptical,” he said. “I don’t think elected officials would support it without widespread public support.”

Winthrop University conducted a poll of South Carolinians in 2017 that said 7 in 10 respondents favored legalizing gambling if the revenue could go toward fixing roads. Bailey said he would have to hear from his constituents in Little River before taking a stance in favor of legal betting.

But that’s the point of the Palmetto Forum, Rex said, to bring people together from across the state to discuss if legalized gambling is politically feasible and something people want. That information will then be given to the state legislature in hopes of getting a hearing on the matter or even a state-wide referendum.

So for now the Palmetto Forum for Gaming Studies is going about its research by looking at how other states do it, what are the public’s concerns and if this will improve the state.

The forum will be hosting events across the state, with the next ones in Beaufort County and York County. More details on these events will be available soon.

“If there is broad public support … the (politicians) will take it up,” he said. “It’s something that time has come.”