South Dakota Administrative Rules Title 48 - South Dakota Lottery
South Dakota Administrative Rules – Title 48: South Dakota Lottery
I. Overview
Title 48 of the South Dakota Administrative Rules regulates the state lottery system, including instant tickets, video lottery machines, and on-line lottery games. These rules implement the statutes in SDCL Chapter 42‑7A and provide details for:
Licensing and operations of lottery retailers and machines
Game rules and procedures
Prize claims and payouts
Compliance and enforcement
The rules are structured into three main articles:
Article 48:01 – Instant Lottery: Covers scratch tickets, handling, and disclosure rules.
Article 48:02 – Video Lottery: Covers licensing, operation, machine standards, and audits.
Article 48:03 – On-line Lottery: Covers lottery draws, retailer duties, ticket sales, and prize claims.
II. Key Regulatory Areas
1. Instant Lottery Rules (Article 48:01)
Ticket handling and prohibited conduct
Retailers cannot exchange tickets or alter them to manipulate outcomes.
All instant tickets must be stored and sold according to lottery rules to maintain integrity.
Winner disclosure
The lottery may publish a winner’s name, city, state, and prize amount.
This ensures transparency while protecting individual privacy.
2. Video Lottery Rules (Article 48:02)
Licensing and eligibility
All video lottery machines must be licensed.
Operators must comply with regulatory standards and keep payments and operations current.
Machine requirements
Machines must function reliably, returning credits in case of malfunction.
Hardware and software must meet audit and reporting standards.
Liability
Machine operators are responsible for malfunctions that affect payouts or credits.
The state is not liable for individual machine malfunctions.
Posting of odds
Operators must clearly post game odds and keep records of all transactions.
These records are available for regulatory audits.
3. On-line Lottery Rules (Article 48:03)
Retailer duties
Retailers must operate terminals securely, monitor age restrictions, and sell tickets according to official rules.
Prize claiming
Winners must claim prizes within specified periods (typically 180 days).
Rules detail how prizes are validated, paid, and taxed.
Game procedures
Rules define draw mechanics, odds, prize structures, and official drawing procedures.
Transparency and randomness are ensured through administrative procedures.
III. Relationship Between Rules and Statutes
The administrative rules are authorized by SDCL Chapter 42‑7A.
They cannot exceed statutory authority.
They provide detailed procedures to ensure fair, regulated lottery operations.
The rules are overseen by the Lottery Commission and subject to legislative review.
IV. Key Case Law
1. Poppen v. Walker (1994)
Issue: Whether South Dakota’s video lottery violated the state constitution banning lotteries.
Holding: The court held video lottery is a valid state lottery if regulated and state-controlled, consistent with the constitutional amendment.
Significance: Confirms that the administrative rules for video lottery are constitutionally grounded.
2. Chance Management, Inc. v. State of South Dakota
Issue: Whether residency requirements for video lottery operators violated the U.S. Constitution’s Commerce Clause.
Holding: South Dakota, as a market participant controlling the lottery, can enforce these requirements.
Significance: Upheld the legitimacy of structural rules for operating video lottery machines.
3. Parsons v. South Dakota Lottery Commission (1993)
Issue: Dispute over rightful ownership of an unclaimed prize.
Holding: The court upheld the lottery’s administrative determination of prize claims.
Significance: Validates administrative procedures in handling claims and disputes.
V. Practical Implications
Retailers and operators must strictly follow rules or face fines, license suspension, or revocation.
Rules protect players by requiring posted odds, regulated payouts, and proper claim procedures.
Auditing and reporting rules prevent fraud and ensure transparency.
VI. Summary
Title 48 provides a complete regulatory framework for South Dakota’s lottery:
Instant games: ticket handling, prize disclosure
Video lottery: licensing, machine standards, operational compliance
On-line lottery: ticket sales, claims, game rules, and draws
Case law confirms that these rules are constitutionally valid and enforceable, providing legal authority for both operation and regulation of the lottery system.
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