How to Get a Lottery Retailer License in South Dakota

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Continue below to learn more about lottery retailer licensing in South Dakota. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts.

 

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Who Licenses Lottery Retailers?

There are two types of lottery retailer licenses in South Dakota, both of them are issued by the South Dakota Lottery Commission. One is for retailers selling scratch tickets and lotto tickets, and the other is for video lottery operators who own video terminals and service them using technicians certified by the South Dakota Lottery. 

What Are the Steps in the Licensing Process?

The application process is nearly the same for both types of South Dakota lottery licenses, with one big exception: applicants for a video lottery operator license must purchase a lottery bond.

The online application for either license can be accessed from links on the South Dakota Lottery website.

Why Is a Surety Bond Required?

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.

How Do They Work?

The obligation and the principle are two of the three parties to the legally binding South Dakota lottery bond agreement. The third party is the bond’s guarantor, known as the “surety.”

The terms of the lottery bond agreement legally obligate the principal to pay all valid claims. It’s the surety’s responsibility to investigate and determine the legitimacy of each claim received.

The lottery bond agreement also obligates the principal to pay all valid claims. However, in guaranteeing the bond, the surety agrees to extend credit to the principal for the purpose of paying a valid claim. The principal will pay the claimant directly to ensure prompt resolution of the matter. The principal then must repay that debt to the surety or face legal action by the surety to recover the funds.

What Do They Cost?

South Dakota lottery bonds are subject to an underwriting process to establish the premium rate. The biggest factor in that determination is the principal’s personal credit score. That’s the best measure of the risk that the principal might not repay the surety for claims paid on the principal’s behalf.

The risk level is considered low when the principal has a high credit score, so the premium rate also will be low, perhaps as low as 1%. The reverse is also the case—a low credit score suggests a higher risk level, so the premium rate also will be higher.

 

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Continue below to learn more about lottery retailer licensing in South Dakota. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts.

 

CONTACT US FOR A

SOUTH DAKOTA LOTTERY BOND QUOTE

Who Licenses Lottery Retailers?

There are two types of lottery retailer licenses in South Dakota, both of them are issued by the South Dakota Lottery Commission. One is for retailers selling scratch tickets and lotto tickets, and the other is for video lottery operators who own video terminals and service them using technicians certified by the South Dakota Lottery.

 

The application process is nearly the same for both types of South Dakota lottery licenses, with one big exception: applicants for a video lottery operator license must purchase a lottery bond.

The online application for either license can be accessed from links on the South Dakota Lottery website.

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.

The obligation and the principle are two of the three parties to the legally binding South Dakota lottery bond agreement. The third party is the bond’s guarantor, known as the “surety.”

The terms of the lottery bond agreement legally obligate the principal to pay all valid claims. It’s the surety’s responsibility to investigate and determine the legitimacy of each claim received.

The lottery bond agreement also obligates the principal to pay all valid claims. However, in guaranteeing the bond, the surety agrees to extend credit to the principal for the purpose of paying a valid claim. The principal will pay the claimant directly to ensure prompt resolution of the matter. The principal then must repay that debt to the surety or face legal action by the surety to recover the funds.

 

South Dakota lottery bonds are subject to an underwriting process to establish the premium rate. The biggest factor in that determination is the principal’s personal credit score. That’s the best measure of the risk that the principal might not repay the surety for claims paid on the principal’s behalf.

The risk level is considered low when the principal has a high credit score, so the premium rate also will be low, perhaps as low as 1%. The reverse is also the case—a low credit score suggests a higher risk level, so the premium rate also will be higher.

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