South Dakota Lotteries

In November 1986, voters passed a constitutional amendment authorizing a lottery. In 1987, legislators passed SB254, which established the South Dakota Lottery and the Lottery Commission. The Lottery sold its first ticket on 30 September 1987. Currently it offers a variety of instant scratch and Lotto games. It also has video lottery terminals (VLTs).

The South Dakota Lottery is an entirely self-funded agency – no tax dollars are used for its operation. The Lottery's net proceeds are distributed to benefit educational causes, toward nature conservancy and to help reduce property taxes. Net revenue from VLT machines, which is set at 50%, is distributed to the Property Tax Reduction Fund and to the Department of Social Services. The Commission, which is responsible for setting policy and overseeing the operation of the Lottery, is a seven-member board appointed by the Governor. Each member serves for a three-year term. South Dakota became the first state to have VLTs in 1989.

In 1992, South Dakota voters rejected a ballot referendum that would outlaw VLTs. Soon after the vote, a lawsuit questioning the constitutionality of VLTs was filed. The State Supreme Court heard the argument and in June 1994, ruled that VLTS were unconstitutional. In July 1994, a resolution was passed to place a constitutional amendment on the general election ballot that authorized the operation of VLTs. The referendum passed and VLT games resumed on 22 November 1994.

By law, a minimum of 50% of the Lottery ticket revenue must be returned to players in the form of prizes. Prizes may be claimed up to 180 days after the official end of the game. After that time, the unclaimed prizes are added to the prize pools of subsequent lottery games. In 1989, the passage of HB1344 authorized tribal governments to receive back from the state up to 50% of lottery revenue on those products sold on their reservation.

Retailers are the Lottery's primary sales channel. Retailers must be licensed by the Lottery before they can sell any Lottery products and earn a commission for the products they sell. For instant and online tickets, licensed retailers receive a 5% commission on each ticket sold. Instant retailers receive a 1% selling commission for all instant prize winning tickets sold over $101 and a 1% cashing commission for cashing instant prize winning tickets of $1 up to $100. Retailers may also receive a cash bonus for any jackpot-winning tickets they sell for Powerball, Mega Millions, Dakota Cash, Sizzler and Wild Card 2 for $500 to $2 million, depending on the game and the prize amount.

In September 2019, the South Dakota State Lottery agreed to a seven-year contract with Scientific Games for video lottery and in September 2022, Scientific Games signed a six-year contract to provide instant games.

Although regulated by the South Dakota Lottery, Casino City considers VLTs to be a casino and card room gaming activity.