A lottery bond provides financial protection for the South Dakota Lottery Commission, which requires the purchase of the bond as a mandatory step in the process of obtaining a video lottery operator license and is known as the bond’s “obligee.” In addition to requiring a bonded video lottery operator (known as the bond’s “principal”) to comply with all applicable South Dakota laws, the bond also provides a source of funds to compensate the obligee or other parties for monetary damages incurred as a result of the operator’s noncompliance.
The obligee calculates the required bond amount as 1/18 of the state’s share of the net income from the principal’s video lottery machines over a 12-month period.
