DEADWOOD, S. D. - Before state residents legalized gambling here in 1989, most people in this town of 1,800 or so lived life in the slow lane. They'd see each other for coffee at Marie's Cafe or later in the day at Olé's for a game of cards. Except for a few hundred jobs provided by the Homestake Gold Mine, the town scraped by on seasonal tourism. Summer provided the biggest boost, when thousands of bikers rolled into town for the annual Sturgis Motorcycle Classic and Rally, the second-largest biker gathering in the nation.
But above all,
people visited Deadwood in the Black Hills because it was part of
the Wild West. This is the mining camp, founded in 1876, where Wild
Bill Hickok was shot. He'd only been in town a few weeks when he
made the fatal mistake of sitting with his back to the door,
playing a poker hand of black aces and eights, known thereafter as
a Dead Man's Hand. This was also home to Calamity Jane, Poker
Alice, Preacher Smith and Potato Creek Johnny, a beloved,
4-foot-3-inch prospector from Wales who found one of the Black
Hills' biggest gold nuggets. Less well-known figures had nicknames
like Jimmy-Behind-the-Deuce, Bummer Dan and Slippery Sam.
Legal or not, some bars offered poker games and
"for amusement only" slot machines. The upstairs still housed
prostitutes. This rough-and-tumble legacy lingered until the 1980s,
when state and federal agents shut down the last three whorehouses
and many retailers closed their doors. Deadwood was almost dead,
and a new Wal-Mart and Kmart in nearby Spearfish promised to put
the final nail in the coffin.
"We were left with
about 10 shops that sold rubber tomahawks nine months out of the
year and were boarded up the other three," says Mike Trucano, who
owns Black Hills Novelty, a slot and game machine
Then town leaders hit on an idea: Why
not legalize some gambling and turn Deadwood into a year-round
tourist town? This would bring back the flavor and fun that had
left with the madams. Tax revenue from gaming would help prop up
the crumbling buildings and replace outdated water and sewer lines.
The goal wasn't to recreate Las Vegas, but
rather to supply an economic shot in the arm. There would be
mini-casinos offering poker, blackjack and slot machines with $5
bet limits at establishments such as the Old Style Saloon No. 10,
said to be where Wild Bill was shot. To open a casino, businesses
would also have to run another non-gambling enterprise such as a
restaurant, bar or soda fountain. Town leaders proposed a limited
number of machines for each building; the first suggestion was 15,
later upped to 30. Gambling would act as a magnet to draw in
tourists. But, the thinking went, the town itself, and the beauty
of the Black Hills, would keep them coming
Trucano and seven other locals formed a
committee called "Deadwood, You Bet" to promote the idea. They
criss-crossed the state drumming up support for a state
constitutional amendment legalizing limited gambling inside the
city limits of Deadwood. The signature drive worked: It went to the
ballot and passed in November 1988, by 64 percent; the state
legislature passed enabling legislation in April of the next year;
and finally, Deadwood citizens approved gambling in a special town
election. The new gambling era began at high noon on Nov. 1, 1989.
The change was dramatic: Deadwood went from
boarded-up to booming almost overnight. Streets and sidewalks were
ripped up to restore the cobblestones and to put in new water
mains. The city renovated its fire station, museum and library.
City hall and the police station moved into new digs, and a
visitors' center was opened in the old train station. The
improvements were underwritten with bonds the city is paying back
with gambling taxes. And the money flooded in: Some 2 million
tourists spent $150 million in Deadwood last year. Of that, the
city collected roughly $5 million in gaming
But amid all the new money, the locals
In seven years, Deadwood's gaming
halls have multiplied, going from nine at the start to a current
high of 80. Today the town has 2,242 slot machines and 68 blackjack
and poker tables. Every Tom, Dick and Jane opened a casino, and the
governor-appointed South Dakota Gaming Commission let them.
It approved casinos whose only retail was a
T-shirt or candy stand. By loosely defining what a "building" was,
some casinos were allowed to put in more than 30 machines. Based on
the original architecture, the foundation plan or the number of
businesses, the gaming commission might decide a single structure
should be counted as two or three buildings. The Gold Mine resort,
a new hotel in the planning stages, is bending the law creatively:
Its foundation is split into 13 foundations, enough "buildings' for
390 slot machines.
Betty Whittington, a Deadwood,
You Bet member who has since changed her campaign buttons to read
"Deadwood For Sale," says town leaders might have put the brakes on
the explosive growth. "But it would have taken someone with
backbone." She says the gambling commission and carpetbaggers that
moved in forgot that there was a town - and townspeople - here at
Now, the people of Deadwood are split on
whether their new-found prosperity is worth it. A few have moved
away in disgust. Others, like Mayor Barbara Allen, believe it was a
matter of survival: "We have a degree of confidence now that we'll
still be here tomorrow," she says.
has exacted a price: When the people of Deadwood lost control as
casinos proliferated in their town, they also lost control of their
rents, their taxes, their mobility and their
There's a phenomenon scholars call
"cannibalization" that often occurs when gambling is introduced in
a free-market economy. Real estate speculation drives prices sky
high on Main Street; many businesses willingly sell out to the
first buyer. Then as casinos rake in cash hand over fist, the
hold-outs soon sell or convert to a casino.
Before gambling there were nine stores in
downtown Deadwood, including three car dealerships, a department
store, a few clothing shops and an auto-parts store, points out
Susan Kightlinger, a former Chamber of Commerce employee. There
wasn't much to cannibalize, and within a year, they were all gone.
Virtually no retail exists in downtown Deadwood today - and there
are definitely no gathering spots like Marie's Cafe.
Hilda Fredericksen, who raised six children in
Deadwood, misses the old bowling alley the most. Now, it's Deadwood
Gulch Resort, with a casino and an 8,000-square-foot arcade -
Gulches of Fun - for kids.
extended to the casinos themselves, as some, especially the smaller
ones, are finding it hard to make a living in such a competitive
world. Deadwood enjoyed a brief monopoly when gambling first became
legal, but three mining towns in Colorado and scores of Indian
reservations have since opened up casinos of their own. In
addition, state-operated video-lottery machines greet South
Dakotans in nearly every pizza parlor, bar and liquor store. Having
bought in at inflated prices, Deadwood casino owners find it almost
impossible to sell.
Today, it seems more like a
stalemate than a boom.
Deadwood's state of limbo
is apparent at the Fairmont Hotel. A brothel in boom times and a
flophouse during busts, it's now a casino. Owner Ron Russo has put
$1.6 million of his own money, plus $300,000 in historic
preservation loans from the city, into the hotel. He keeps the
casino open but says his hotel still needs about $1 million in
improvements. The downstairs is mostly restored to its historic
glory; the upstairs remains stuck in the flophouse days.
Russo, a former cable TV executive with a New
Jersey accent, is eccentric enough to fit in with Deadwood's past.
Usually wearing a leather vest, he looks like a biker who came to
the Sturgis Rally and never left. He can talk for hours about his
plans for the hotel, or about the junk he's found while renovating:
suitcases belonging to the bums who once slept here and old gaming
tables hidden during a big raid in the 1940s. Downstairs, in the
basement, he shows off the bar where he hosts parties for the
bikers in August; the countertop is recycled from one of Deadwood's
defunct bowling lanes.
He wishes he had the money
to finish the hotel, but he still hasn't paid last year's taxes. He
hopes to pay them soon - and get back the wine license the city
suspended - when he sells some property to the
Russo believes real estate will rebound
when Deadwood becomes more a destination resort. He says he'll
probably sell the hotel then, because "it gets hard seeing people
lose their money gambling."
Casino owners aren't the only ones with
economic troubles. Residents like Hilda Fredericksen and her
husband, Dwayne, moved from a house downtown to Deadwood's only
mobile-home park, Claim Jumpers, when casino traffic made parking
too difficult. She took that move in stride - after all, she had
seen other area residents relocated for expansions in mining, which
was Deadwood's mainstay industry before gambling. But now Claim
Jumpers has a new owner who raised the rents by $100, and rumor has
it he might build a motel or casino there. The Fredericksens may
have to move again.
Property owners are also
being hit. Gambling proponents promised property taxes would go
down because of casino profits. Instead, taxes have gone up all
over the state. Elmer Pritchard, a city commissioner and owner of
the town's Laundromat, says his slot machines don't make him any
real money. "It just about pays my property tax," he says.
Although Deadwood residents say they still feel
safe, crime has increased nearly three-fold since gambling - and
its attendant growth and tourism - began. And despite the enormous
amount of money flowing through the town, Lucile Tracy, who runs a
program called the Lord's Cupboard for the Methodist church in
nearby Lead, says she hands out food to about 200 people a month,
compared to three people a week before gambling arrived. Some of
those people are compulsive gamblers, but many are newcomers who
come to work in the casinos at $4.25 an hour, and find it difficult
to feed their families and pay the bills.
real hard for me to condemn the casinos, though, because they bring
in big vanloads of food," says Tracy.
A deal with the
Some residents say all the other growing
pains pale in comparison to the loss of community. They feel they
forfeited their downtown in a Faustian trade for survival. Hilda
Fredericksen says it's a standing joke: "Gee whiz, we have to go to
Sturgis, Spearfish or Rapid City to see someone you know from
Kids complain they have nothing to
do. Since most casinos don't allow minors, they say the only
remaining hang-outs are the fast food
Some people say it's even taken the fun
out of gambling. Before legalization, people used to make sure
problem gamblers didn't get in too deep, says Whittington. It
wasn't unusual for a bar owner to return money to customers who
lost too much. Now it's too corporate and state regulators wouldn't
allow it. "I'd rather deal with the Mafia than get picked to death
by bureaucrats," says Whittington.
difficult to imagine amid the din of slot machines, some people
predict Deadwood will become South Dakota's Aspen - a once-funky
mining town transformed by big bucks and newcomers into a resort
for the rich and famous.
Mayor Allen says town
leaders are trying to avoid "Aspenization" by bringing back a sense
of community. The town hopes to build a regulation-size ballfield
and spruce up the rodeo grounds.
"If you build it, they will
Some residents say the town's only choice
is to get bigger and better. In gambling, it's called chasing your
Enter Kevin Costner, the Hollywood
actor, and his brother Dan. Costner rediscovered the Black Hills
during the filming of Dances With Wolves. Shortly after gambling
became legal, he and his brother bought the Midnight Star, which
they turned into the classiest casino and restaurant in
Now they're planning a resort and
casino, scheduled to open in May 1998, that should transform the
town yet again. The new resort will be called the Dunbar, after
John Dunbar, the character Costner played in Dances With Wolves.
With 838 acres and 320 rooms decorated Ralph Lauren Western-style,
it promises to be a hotel the likes of which the Wild West has
never seen. Plans include an 18-hole golf course, tennis courts, an
equestrian center, a fishing lake, a snow bowl for sledding, a full
gym, and of course, the casino. Jim Fisher, program director for
the resort, says costs will likely exceed $100 million.
The Dunbar will cater to a whole new corporate
clientele, says Fisher. Resort planners are hoping to lure urban
professionals from both coasts and from abroad - especially from
Japan, where people are crazy about Kevin Costner and the Wild
West. Rooms will go for $200 and up in the summer, Fisher
Townspeople have heard the rest before:
They won't come just for gambling. They will come for conventions,
to ski at one of the two local resorts or simply to enjoy the
beauty of the Black Hills.
But it's been rough going for the
Costners, slow enough to make some locals wonder whether it will
First, a land trade between the
Costners and the Forest Service angered a few vocal Lakota Sioux,
one of the tribes that had befriended Costner during the movie
filming. The Sioux have long fought for land rights in the Black
Hills, and some were angered by the brothers' plans to build a
resort on land they consider theirs.
Costners said they wouldn't build their resort unless the state
raised the bet limit from $5 to $100. After three separate votes in
the state legislature, the bet limit narrowly passed, only to be
defeated in a statewide referendum that anti-gambling forces in
South Dakota campaigned to put on the ballot.
After the last defeat, the Costners threatened
to pull the plug on the project. So the state, the county and the
town of Deadwood offered the brothers millions in tax breaks, plus
help with a short-line railroad between Rapid City and Deadwood.
The railroad and steam trains will be paid for by state bonds but
guaranteed by the Dunbar.
Now that the resort
seems to be chugging full-steam ahead, the town is preparing itself
for the new breed of tourist and looking forward to the
better-paying jobs the Dunbar will offer. Residents are hoping some
retail businesses will return, though they realize the stores are
more likely to be J. Crew than J.C. Penney.
town residents think of the Costners as "Deadwood's great white
hope" (though they've been called a few choicer names as well).
Town leaders say even if the project fails, they
still need to keep upgrading what they offer tourists. "To me, the
Dunbar is always icing on the cake," says Franklin Hotel and casino
owner Bill Walsh, a former priest who gave up the Catholic church
for "the theology of leisure." "We're already a destination resort