Critics argue proposed liquor license system favors chain restaurants with deep pockets

Sioux Falls City Council set to vote on plan to create bidding process for new liquor licenses

A plan to scrap the way Sioux Falls distributes liquor licenses opened a broad debate Tuesday among city councilors, ranging from the amount of alcohol in the city to a debate on free-market economics.

Mayor Paul TenHaken’s administration wants to revamp the current system in which off-sale and on-sale liquor licenses are sold to the public. Currently, those licenses, which are capped by state law, are awarded in Sioux Falls by a lottery system. The administration wants to replace that system with a bidding process in which high bids would win the right to purchase licenses.

Off-sale licenses are currently $500 and on-sale licenses used by bars and restaurants sell for $240,646 in Sioux Falls. State law dictates that municipalities the size of Sioux Falls can’t sell on-sale licenses for less than $1 for each person living in that city, and licenses are capped based on population. Currently, Sioux Falls’ price is about $1.25 per resident.

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