Sioux Falls Business Journal

The Legislature’s move to allow cities to issue a new class of liquor licenses designed for full-service restaurants indeed has been good news for developers and others looking to help lure more restaurants to Sioux Falls and surrounding towns.

As far as that goes, having available liquor licenses is an enticing tool.

Still, as the Sioux Falls area moves forward, there are other related issues that cities will need to deal with so that the new system will be its most effective.

After all, there’s no sense of exiting one mess just to enter a new one.

One of these thorny, new details involves sorting out the role video lottery should play, and that debate already is rearing its head in Sioux Falls.

Gov. Mike Rounds had been clear during this past legislative session that he doesn’t want to see video lottery establishments left out in the cold as cities begin issuing new liquor licenses.

Indeed, making sure that video lottery interests were protected was critical in getting the governor’s approval for the legislation that allowed this new class of liquor licenses.

So that means there’s now a legal possibility that a full-service restaurant also could allow patrons to hit 21.

And that leaves cities with the dubious challenge of managing video lottery growth without hurting other potential development.

City Council members are discussing restrictions on video lottery establishments that are similar to the rules that come with beer and wine licenses. Video lottery establishments that have those licenses cannot exist within 2,000 feet of each other, schools or parks.

That still sounds like a fine place to begin discussions on how to handle the new liquor licenses.

Some will see that kind of move as undue infringement on competition. And, yes, we need to avoid re-creating prohibition-like conditions that led us to this liquor license mess in the first place.

However, the trump card in this case ironically lies with making sure video lottery establishments don’t end up overly clustered, especially in the city’s core or near kids.   

Land-use restrictions could force new video lottery establishments that somehow also qualify as full-service restaurants into newly developed areas of Sioux Falls. That’s because it’s hard to find much existing space in Sioux Falls that meets the 2,000-foot requirement without a video lottery permit already associated with it.

Meanwhile, those full-service restaurants that aren’t interested in video lottery will be unhindered in going wherever the city’s growth leads them, maintaining the true spirit of the legislation.

There’s the possibility that the video lottery issue is a red herring. One developer I talked with awhile ago said the restaurants he’s dealing with want to cater to families.

Nonetheless, it’s good the City Council is talking about how to manage video lottery. It’s a step in the right direction.