A bill inspired by this blog's reporting has received unanimous approval from both chambers of the South Dakota Legislature. Senate Bill 18 makes conducting a fake raffle a crime prosecutable under South Dakota's deceptive trade practices statute. In five votes—Senate Commerce and Energy, full Senate, House Judiciary, full House, and Senate again to concur in amendment—not one voice rose in opposition to this bill, because every sane person recognizes that selling tickets for a raffle, then not holding the raffle and not refunding ticketholders ought to be a crime.

Such a crime is apparently rare in South Dakota. In testimony to Senate Commerce and Energy and House Judiciary, Attorney General Marty Jackley said that since 2009, the Division of Consumer Protection has fielded 25 complaints about raffles. Seven of those complaints came from three raffles that cheated no one but erred on technicalities:

  1. Backyard Motorcycles LLC sold tickets for a raffle to benefit Children's Miracle Network, but SDCL 22-25-25 does not allow for-profit entities to conduct raffles.
  2. Full Throttle Saloon sold tickets for a raffle in violation of the same for-profit-entity restriction and failed to register its raffle with the Secretary of State.
  3. Black Hills Youth Football did not register and sold tickets outside of its jurisdiction.

AG Jackley said all three of those errant rafflers have refunded ticketholders, are refunding, or are working with the AG's office to make things right.

The remaining eighteen complaints all come from the same raffle: Preventive Health Strategies' fake raffle of land in Moody County, promoted in late 2012 and 2013 by U.S. Senate-candidacy-bound Annette Bosworth and her husband Chad Haber. PHS sold raffle tickets for $1,000 apiece but never held a drawing, never awarded the prize (AG Jackley confirmed the Moody County land has not changed hands) and never offered refunds. Five months after this blog broke the story of this fake raffle in November 2013, and after Bosworth and Haber attempted to cover their scam by publicly framing former employees, the Attorney General managed to shake five $1000 refunds out of PHS.

However, in his testimony to the Legislature, AG Jackley said the remaining thirteen complaints against PHS remain unresolved. The Attorney General used the present perfect progressive, saying his people "have been trying to work with the owners," suggesting that the AG's effort to get Bosworth to cough up the $13,000 they swindled from the remaining complaining ticketholders is not over.

According to Attorney General Jackley, Senate Bill 18 will not be retroactive. The PHS raffle scam will not be subject to prosecution under SB 18. However, AG Jackley told Senate Commerce and Energy chairman Sen. R. Blake Curd (R-12/Sioux Falls) that his office could still bring theft charges if it can prove that PHS had fraudulent intent never to conduct its Moody County raffle.

House Judiciary added an amendment at the request of the Attorney General and State Treasurer Rich Sattgast to remove the 30-day refund requirement and bring Senate Bill 18 in line with the state's other unclaimed property statutes. That amendment allows the AG to pursue bogus raffle claims, place retrieved funds in the unclaimed property fund, and let the Treasurer handle distributing refunds. The Senate thus had to take up SB 18 again today to concur with that amendment. With today's unanimous vote, the Bosworth-Haber raffle scam bill now heads for the Governor's desk.

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Attorney General Marty Jackley's 2015 legislative package has hit the hopper in the form of Senate Bills 11 through 18. Of particular interest to readers of this blog will be Senate Bill 18, AG Jackley's effort to make really, truly illegal the kind of raffle scam perpetrated by Chad Haber and Annette Bosworth in 2012 and 2013 and uncovered by this blog in November 2013.

SB 18 sets these rules for raffles and lotteries:

No lottery may continue for longer than eighteen months after the date on which the first ticket is sold. If an organization determines that a drawing cannot be held within eighteen months, the organization shall within thirty days notify all purchasers that the lottery cannot be completed or prize awarded, and that each purchaser is entitled to a full refund of the ticket price upon the submission of a request for refund. If a purchaser fails to contact the organization and request a refund within one hundred eighty days after the notice was given, the organization shall within thirty days remit the unclaimed refund amount to the Office of State Treasurer as unclaimed property [Senate Bill 18, South Dakota Legislature, posted 2015.01.07].

But look out! Senate Bill 18 reveals a Channette Loophole in our consumer protection laws. SB 18 adds violations of the above new rules to the list of deceptive acts or practices. But check out the existing penalty clause of that statute:

Each act in violation of this section under one thousand dollars is a Class 1 misdemeanor. Each act in violation of this statute over one thousand dollars but under one hundred thousand dollars is a Class 6 felony. Each act in violation of this section over one hundred thousand dollars is a Class 5 felony [SDCL 37-24-6].

Chad and Annette sold raffle tickets for $1,000 a pop, then failed to draw for the prize or refund buyers (at least not until public scrutiny and the AG's pressure forced them to hand cash back to a few of their marks). Under the above statute, would that have been a Class 1 misdemeanor or a Class 6 felony?

Update 2015.02.12 17:36 CST: The omission of exactly one thousand dollars from the deceptive trade practices statute came from the Attorney General's office just one year ago in its 2014 Senate Bill 23. In testimony on this year's Bosworth-Haber raffle-scam bill, SB 18, Attorney General Jackley said the dollar figure is aggregate, not per ticket, so selling 18 bogus raffle tickets for $1,000 each in violation of SB 18 would constitute a Class 6 felony.

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I'm reading up on the Mid-American States Purchasing Economy Survey Report, a survey of supply managers in nine states conducted monthly by Dr. Ernie Goss and associates at Creighton University's Heider College of Business. Our local press like to blurb these survey results without much analysis. Stay tuned for my take on the latest data in a later post.

But as I read, I notice that Dr. Goss's December 17 blog post, which also heads his November survey report, cast doubt on the wisdom of betting your state fiscal health on casino gambling:

Between 2000 and 2012, despite assurances from elected and non-elected officials, states with commercial casinos versus states without commercial casinos experienced lower GDP growth, 54.8% versus 62.6%, and inferior job growth, 5.5% compared to 8.7%. Furthermore in 2012, states with commercial casinos shelled out 15.2% of GDP in the form of transfer and welfare payments. This was significantly higher than states without commercial casinos of 13.8%.

And did commercial casinos produce lower tax burdens? No! For the latest year, citizens of the 23 commercial casino states suffered a state and local tax burden as a percent of GDP of 8.6%, while the 28 states and DC with no commercial casinos experienced a lower 8.1% tax burden.

Commercial casino states did, however, spend more on education. In 2012, gambling states spent 5.6% of GDP on education which was above the 5.3% of GDP spent by non-casino states [Ernie Goss, "Commercial Casino Gambling: Hurts Economic Growth & Increases Welfare Spending," Economic Trends, 2014.12.17].

Alas, Dr. Goss doesn't cite his sources, so I can't immediately dig out the South Dakota numbers. I can note that South Dakota's GDP growth ranked ninth in the U.S. in 2013 and 18th for GDP growth from 2008 to 2012. Our state and local spending on education in 2012 was 4.6% of our GDP.

We should not conclude that casinos damage a state's economy or increase the tax burden. It could be states have opened up casino gambling in response to tough economic conditions. But the data do allow us to conclude that casino gambling does not by itself make a state's tax revenues and economy outperform those in states that resist the gambling bug.

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The Legislature has no bills in the hopper yet (Session doesn't open until January 13—ugh! I can't wait!), but Attorney General Marty Jackley has posted his legislative package for the new year. South Dakota's most popular Republican is riding his massive mandate to proposing eight new laws (because Republicans... like... more laws...?) to make us all safer:

  1. Put child sex traffickers on the sex offender registry: perfectly sensible—selling child porn puts crooks on the sex offender list, so why not selling children?—but techincally necessary? SDCL 22-24B-1 already lists sexual exploitation of a minor and promotion of prostitution of a minor as registrable offenses. I look forward to hearing AG Jackley's committee testimony to explain the necessity of specific trafficking language.
  2. Make raffle scams illegal: Hey! The Madville Times makes a difference! This blog broke the story in November 2013 of Chad Haber and Annette Bosworth conducting phony raffles. The Attorney General managed to force Haber and Bosworth to refund some ticketholders, but incredibly was unable to prosecute the raffle scammers because state law doesn't actually require that folks selling raffle tickets actually draw for the prize they promise. (I still think Haber and Bosworth may have violated some other prosecutable raffle statutes.) Crazily, Haber ran against Jackley for the AG spot this year, perhaps to stop exactly this kind of legislation. Expect swift and unanimous passage.
  3. Let cops and first responders administer overdose treatment: AG Jackley wants to train and equip police and first responders to give the drug Naxolone, also known as Narcan, to opioid drug overdose victims. Narcan can save lives, and U.S. Attorney General Eric Holder promoted its use by federal agents, but expect some serious discussion of the precautions necessary to turn cops into medics.
  4. Let soldier's spouses get concealed weapons permits: SDCL 23-7-7.1(6) requires an applicant for a concealed weapons permit to have lived in the county of application for at least thirty days. Apparently thirty days is too long for a soldiers's spouse to wait to carry a concealed weapon. (But wait: there still isn't any rule stopping the wife of a new transfer to Ellsworth or anyone else from openly carrying a pistol from the day of arrival in South Dakota, is there?)
  5. Legalize police scanners! Technically, all the fun South Dakota reporters and citizens have listening to their local cops on police scanners is illegal. In a small nod to transparency, AG Jackley wants to revise that law to make monitoring police communications illegal only while committing a felony.
  6. Protect DCI and HP bosses from political backlash: AG Jackley wants a law that gives the DCI director and the Highway Patrol superintendent their old jobs back if their appointments are revoked without cause. The Governor appoints the HP chief; the AG appoints the DCI boss. Curious: when's the last time either official was dismissed without cause?
  7. Make bigger lemons! AG Jackley wants to update South Dakota's consumer protection laws to raise the vehicle weight limit for our lemon law from 10,000 pounds to 15,000 pounds. (Hmm... will we have to change the name to "grapefruit law"?)
  8. Allow Supreme Court to correct illegal sentences: The AG says he is responding here to federal Supreme Court decisions; I'll have to see the bill and hear the testimony to make sense of the impact, but it sounds like minor bookkeeping.

Stay tuned for the real bills, coming sometime in the next couple weeks!

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Speaking of religious apocalypticists steering our politics, South Dakota's leading theocracy advocates (Perry Groten calls them a "social advocacy nonprofit"—come on, Perry!) are calling on Christians to keep keno, craps, and roulette from wrecking the Redeemer's return:

A social advocacy nonprofit will lobby against a measure in the upcoming legislative session to authorize three new voter-approved games in Deadwood and at tribal casinos.

Family Heritage Alliance Action executive director Dale Bartscher says the group's board unanimously agreed this month to oppose the legislation.

He says the organization will be urging lawmakers in January not to authorize the new games, which 57 percent of voters supported as part of Amendment Q on Nov. 4 [Perry, Groten, "Non-Profit to Lobby Against New Deadwood Gaming," KELOLand.com, 2014.12.13].

Good grief! What part of "The voters have spoken" do you Republicans not understand? We pass an initiative to raise the minimum wage, and you Republicans rumble about overturning it in the Legislature. We approve diversifying the games with which people can entertain themselves in Deadwood, and you Republicans (show of hands: how many Democrats belong to the political arm of Family Heritage Alliance? how many FHAA folks were lobbying their churchmates to vote for Democrats?) decide you'll sabotage the necessary enacting legislation.

I do appreciate FHAA's willingness to buck the free-market fundamentalism which they erroneously conflate with Christianity and get back to basics on this issue. Here's their pre-election statement against the constitutional amendment that was on the 2014 ballot:

Whereas in most cases, free market should be the primary regulator of business, in the case of an industry that generates so much addiction, societal ills, and even suicide, this should not be the case regarding the gambling industry. For instance, The National Council on Problem Gaming (NCPG) estimates that among South Dakotans, there are 18,000 adult gambling addictions which inflicts on the citizens of the state a whopping annual cost of almost $16 million. The NCPG also estimates that one in five problem gamblers will attempt suicide, putting this statistic at about twice the suicide rate of other addictions [Family Heritage Alliance Action, statement on Amendment Q, 2014.08.26].

I voted against craps, keno, and roulette myself. But the voters have spoken, and 56.69% of them said let Deadwood's casino industry do its thing. If the Legislature won't respect the voters' decision, it will respect the Deadwood casino lobby.

On the upside, we will get to witness the amusing spectacle of the Family Heritage Alliance casting its gentle Jesus against the state's true god, Mammon.

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South Dakota Magazine continues to live dangerously, allowing me to grace its genteel online pages with my political polemics. This week I offer my Leftist voting guide for the 2014 general election.

On candidates, I offer one simple criterion: check the one-party regime in Pierre by electing qualified alternatives to Republicans wherever possible. No surprise there. I offer a few more specifics about the application of that criterion in South Dakota Magazine.

On the three ballot measures, I offer the following advice:

Initiated Measure 17, requiring health insurers to include any willing and qualified provider in their networks: Opponents have characterized IM 17 as “another mandate with more government control over health care.” However, IM 17 doesn't lay a mandate on anyone other than insurers, who have to accept any physician who meets their standards into their networks. You, Mr. and Ms. South Dakota, get more control over which doctor you see. IM 17 may save you money and a trip to Sioux Falls. Vote YES.

Initiated Measure 18, raising South Dakota's minimum wage: The labor and liberty of even the lowest-skilled worker is worth more than $7.25 an hour. Be moral, help workers pay their bills, and stimulate the economy. Vote YES.

Amendment Q, allowing roulette, keno, and craps in Deadwood: No part of a noble constitution should include the word crap. Schoolkids will giggle. Besides, I hear the high-rollers from Asia want to play baccarat. Send this amendment back to the drafters and demand an amendment giving this picayune authority to the Legislature. Vote NO [Cory Allen Heidelberger, "The Leftist's Guide to Election 2014," South Dakota Magazine, 2014.10.29].

I'm not convinced liberty hangs in the balance on Amendment Q. But the other issues and candidates on the ballot offer you real chances to improve economic security, liberty, and governmental integrity for lots of South Dakotans.

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When Charlie Hoffman and I got done riding four-wheeler around the prairie (and have I mentioned how big I smile when I say that phrase?), we went inside to talk politics. And oh, did we talk.

Rep. Charlie Hoffman (R-23/Eureka) discusses Pierre politics at his dining room table. (Photo by CAH, 2014.08.19)

Rep. Charlie Hoffman (R-23/Eureka) discusses Pierre politics at his dining room table. (Photo by CAH, 2014.08.19)

Charlie Hoffman has served three terms as a Republican Representative from District 23. He sat out this year's election, leaving incumbent Rep. Justin Cronin and new-Pierre-comer Michele (one L, just like Bachmann) Harrison to win the GOP primary and ascend without challenge to the State House.

Hoffman is yielding the House floor this year for a handful of personal reasons. He'd like to travel more with his wife, Survivor survivor and motivational speaker Holly Hoffman. Some business matters require his attention back at the ranch. And he has a new hunting dog that he wants to train and bond with properly.

But Hoffman makes his stepback sound like a break, not retirement. He's already looked ahead and seen 2016 as a good opportunity to get back into the House. Rep. Cronin will be termed out, leaving an open seat Charlie can seek without challenging a fellow Republican incumbent.

Hoffman's break appears to have some political motivation right alongside the personal. Hoffman expresses a notable disgust for several aspects of how things are running in Pierre right now. And he said these things to me, a liberal blogger, without the influence of scotch. "I'm a haystacker at heart," said Hoffman, "not a statesman, not a diplomat."

I should check that: did he say haystacker or haymaker? Here they come:

Self-Servers and Legislative Autonomy

Hoffman sees coming a tussle for majority leader in which he does not want to partake. He cites a Janklovian aphorism: "In every class of twenty-some new legislators, fifteen know they'll be governor someday." Hoffman says lots of legislators are serving their political ambitions and trying to put their names (Hoffman offers none) on the marquee. Hoffman would prefer to serve with and be one of the legislators who come to Pierre to serve their districts.

Hoffman says those marquee-seeking legislators create a major problem for the legislative branch. As majority whip, Hoffman says he has seen the Governor happily exploit those self-servers to encroach on the Legislature's proper autonomy. The night before each Legislative workweek begins, Hoffman says the Governor hosts a meeting for all of the GOP House and Senate leaders at the Governor's mansion (read: homefield advantage). The Governor's entire staff attends. The "conversation," says Hoffman, flows mostly one way, as the Governor informs the "leaders" of his plans and priorities for the week. The Governor does not inquire, says Hoffman, about the legislators' plans and priorities. And the GOP leaders, mostly concerned about their place in line, generally accept their weekly marching orders.

Hoffman says this one-way relationship is not how the balance of powers is supposed to work. The Legislature should act independently to bring forth different ideas and allow the best policies to rise via competition. One branch dictating the policy agenda means poorer policy. (What was that Charlie said about pastures with only one kind of grass?) Hoffman wants the climbers to quit climbing and recapture their autonomy and vision. Short of that, Hoffman wishes he could have the opportunity to serve under a Democratic Governor who would rekindle his comrades' commitment to the separation of powers.

(The weird subtext here: we could encourage Republican Charlie Hoffman to run for Legislature in 2016 by electing his Democratic House-mate Susan Wismer Governor this year. Charlie, want to help?)

Harmful Partisanship

Hoffman also expresses annoyance with partisan politics. He says the South Dakota GOP has damaged itself and its candidates by allowing Tea Party agitators to pull the party further right. Local radicals may have gotten a kick out of the SDGOP's impeach-Obama resolution, but recall that such absurd radicalism has boosted Democratic fundraising. Hoffman looks beyond our borders to add that such honyockerism may damage the chances of the national party choosing John Thune for Vice-President in 2016.

Partisanship can damage policy along with party. Hoffman says that, without Medicaid expansion, county governments face higher indigent-care costs, and hospitals either eat losses or pass them on to the rest of us. Expanding Medicaid under the Affordable Care Act would erase those costs, says Hoffman. Permit me to remind you that, as Rep. Wismer said Wednesday, the only reason Governor Daugaard seems to have for not expanding Medicaid is partisan ideology.

Future Plans: Raise Teacher Pay!

If circumstances draw Hoffman back to the House, he says he may spend his entire term working on one project: raising teacher pay. He suggests starting by diverting 10% of all gambling revenue (that cut would be over $10 million) to a teacher-pay trust fund. When the fund accrues enough interest, start writing checks, once a year, to every public K-12 teacher in South Dakota.

Our quick calculations suggest this plan might initially place just $500 extra in each teacher's pocket, only a small step toward beating lowly Mississippi, but one must start somewhere. And Hoffman agrees that raising pay will boost the labor pool and ease the teacher shortage.

But wait: gambling revenues currently support property tax relief. Would Hoffman really support taking away that relief? Yes. Instead of handing out pennies per acre, the state could hand that 10% of gambling revenues to the state Investment Council to generate a far larger return.

Agricultural Productivity Tax

If landowners feel harmed by the reduction of gambling-revenue tax relief, Hoffman will make it up to them by getting rid of the agriculture productivity tax. Hoffman says this bastardization of the property tax is even worse than a straight income tax. This tax, which based on the predicted agricultural production value of land instead of its actual productivity or sale price, deters farmers from raising prairie grass and drives hyper-production of only a few high-priced crops. Farmers who switch from corn and beans to grass this year will still pay tax based on what they could have made raising corn for the next eight years. Even farmers who stick with corn will suffer as corn prices drop: they'll makes three to four dollars per bushel this year, but the county will tax them for the next couple years as if their land were seven- or eight-dollar-a-bushel corn. Hoffman says the Legislature needs to change the productivity tax to something fairer.

* * *

I asked Hoffman if he worried that my reporting the above comments might harm his chances of returning to the House. He paused to think, but pretty quickly said nope. If I'm reading him right (and stop me if you think I'm letting my hopes and the joy of riding four-wheeler all afternoon confound my judgment), Hoffman is professing a commitment to a less partisan, more pragmatic, and more independent Legislature. Let's see if Charlie and District 23 share that commitment in 2016.

Bonus "Did You Know?": One of the photos in Hoffman's home office shows a man riding down Main Street (I forgot to ask where) atop the backseat of a red convertible with a placard on the door reading "Hoffman for Governor."Charlie said that's his dad Leroy Hoffman, who ran against Bill Janklow in the GOP gubernatorial primary in 1978.

Leroy Hoffman also sang opera. He built the house in which Charlie and Holly have raised their family with a beautiful vaulted ceiling for his singing. In the 1960's Hoffman sang well enough to tour Europe professionally. Charlie lived in Europe with his dad for two years during that portion of Leroy's career.

But if you're looking for records, you have to search George Hoffman, not Leroy.

"What," I asked. "Leroy not operatic enough?"

"Yup," said Charlie.

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Zut alors! The South Dakota Legislature's Rules Review Committee has found a way to make English the official and exclusive language in a few dusky corners of our state: the Deadwood card tables. In its continuing response to allegations of high-stakes collusion among poker players, the state Gaming Commission got the Rules Review Committee to say that speaking anything other than English at Deadwood's poker tables is verboten.

I can't wait until some femme fatale enjoying a taco and champagne sneezes and the unlucky yutz next to her instinctively says, "Gesundheit!"

The mischief-maker in me wants to believe there's a court challenge coming: discrimination against Native Americans speaking Lakota, an Americans with Disabilities Act violation excluding folks who speak sign language, something. But the Gaming Commission's lawyer says the linguistic exclusion is kosher:

“The reason we can is because gaming is a suspect activity,” said Mike Shaw, the commission’s attorney. “It is not subject to the same protection that other activities are.”

Sen. Jim Bradford, D-Pine Ridge, said it would be unfair, for example, if two players spoke Lakota at the table and the other players didn’t.

“Same with any language; you could manipulate the game,” Bradford said.

After the meeting Eliason said the “English only” rule is not an attempt to create an official language.

“Its purpose is to prevent collusion among poker players,” he said. “It is the same reason that we prohibited texting and other forms of communication that other players can’t understand or hear or see” [Bob Mercer, "New Deadwood Card Game Rules: No Phones, and English Only," Rapid City Journal, 2014.07.09].

Mercer reports that Nevada and New Jersey have English-only rules like this. Most (but not all) online poker outfits have similar rules. Rules requiring that card players interact in a single common language and medium thus appear to be normal and court-challenge-proof. So all you linguists hoping to impress the ladies will have to save your French for the bar. Quel dommage! Un autre chocolat, mon petit chou?

(Oh yeah, and the new gaming rules ban using cell phones during the game, meaning Pat Powers will squeak again about texting freedom.)

Tangentially Related: Kevin Woster swings the baguette and dishes some French in his essay on Chad Haber.

9 comments

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