Mustang Sally’s in Deadwood, South Dakota, Loses Gaming License Over Illegal Proxy Sports Betting

Posted on: October 5, 2022, 09:57h. 

Last updated on: October 5, 2022, 06:25h.

The owner of Mustang Sally’s in Deadwood, South Dakota, is expressing remorse for knowingly violating the state’s gambling and sports betting rules.

Mustang Sally's Deadwood casinos proxy betting
Mustang Sally’s, a sports bar and former casino parlor on Deadwood’s historic Main Street has lost its gaming license. The South Dakota Commission on Gaming revoked the property’s slots and sports betting privileges after its owner admitted to violating gaming regulations. (Image: TripAdvisor)

The South Dakota Commission on Gaming (SDCG) recently reviewed numerous allegations that Mustang Sally’s, a sports bar with a small allotment of slot machines and sports betting kiosks, was regularly facilitating proxy bets.

Proxy betting is the act of someone placing a bet on behalf of another individual. In South Dakota, placing a proxy bet is a Class 6 felony punishable by up to two years imprisonment and a $4,000 fine.

State gaming officials said there was ample evidence to conclude that at least 95 sports bets were facilitated via proxy. The state alleged that Jennifer Haefs of Lead, South Dakota, a Mustang Sally’s employee, regularly placed wagers for the bar’s owner, Toby Keehn, and others while on the job.

After a brief executive session behind closed doors involving the five-member gaming commission, the SDCG unanimously motioned to revoke Mustang Sally’s Operator and Retail License. They also imposed a $25K fine against the business. The financial penalty is due no later than Oct. 31, 2022.

Owner Admits Guilt

Mustang Sally’s opened in 2002 and quickly became one of Deadwood’s favorite spots for sports. The watering hole offers a basic bar menu with burgers, wings, and fried corn dogs. Before the SDCG’s licensing revocation, Mustang Sally’s also offered 30 slots and two self-service sports betting kiosks.

Voters in South Dakota during the November 2020 election passed a ballot referendum to authorize in-person sports betting in Deadwood and at tribal casinos.

Mustang Sally’s subsequently partnered with ISI Race & Sports for its sportsbook kiosks. The Las Vegas-based sportsbook firm provides turnkey sports gambling solutions.

Since sports betting arrived in Deadwood, Keehn conceded he routinely fancied a sports bet. He often phoned in his bets to Haefs, who executed the wagers in his direction.

I’m incredibly sorry for my bad judgment,” Keehn told the state gaming commission. “It definitely would never happen again.”

The SDCG said its only option was to strip Mustang Sally’s of its gaming license, as Keehn is no longer suitable to operate a Deadwood gaming establishment.

Attorney Roger Tellinghuisen, who served as the attorney general of South Dakota from 1987 to 1991, represented Keehn and Haefs. He asked the gaming commission for “compassion and consideration,” as a license revocation would likely result in the eventual closing of Mustang Sally’s.

The business retains its food and beverage licenses.

Proxy Betting Clearly Banned

South Dakota’s commercial gaming law allows Deadwood’s Main Street to be lined with boutique gaming parlors. The buildings are seemingly stuck in the historic town’s Gold Rush days and prohibit the extension of credit for gambling.

“No licensed gaming establishment, licensee acting within the scope of employment as a licensee, or employee of a licensed gaming establishment acting within the scope of the employee’s employment may extend credit to another person for participation in gaming. A violation of this section is a Class 6 felony,” South Dakota’s gaming law mandates.