How to Get a Lottery Bonds in South Dakota

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Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your South Dakota Lottery Bond needs.

How Do I Get a Lottery Retailer Agents License?

The South Dakota Lottery Commission issues two main types of retailer licenses:

  • Scratch ticket and lotto retailer license
  • Video lottery retailer (manufacturer, distributor, operator, or establishment)

You can apply online using the links provided on the South Dakota Lottery website.

What Does the Licensing Process Involve?

Essentially, the same information is required for all South Dakota lottery license types. The one major difference is that a video lottery operator retailer license carries a bonding requirement, but the other license types do not. Operators own the terminals and provide maintenance using technicians certified by the Lottery.

Why Is a Lottery Bond Required?

Video lottery operators are required to obtain a surety bond in an amount equal to 1/18 of the state’s share of the annual net machine income estimated to be derived from the operator’s video lottery machines. The bond is a guarantee by a video lottery operator (the bond’s “principal”) to do business in full compliance with applicable South Dakota statutes. It also ensures compensation of the state and the public for financial harm resulting from a statutory violation, such as failing to remit all funds due to the South Dakota Lottery Commission (the “obligee” requiring the bond.)

How Does a Lottery Bond Work?

A South Dakota lottery bond is a legally binding contract among three parties: the obligee, the principal, and the bond’s guarantor, referred to as the “surety.” The surety investigates incoming claims to make sure they are valid before approving them for payment. 

The terms of the surety bond legally obligate the principal to pay any claim the surety deems valid, but the surety has guaranteed the payment of claims. Consequently, the surety pays a valid claim initially, but the principal must reimburse the surety for the claim amount. Failure to reimburse the surety can result in the surety taking legal action against the principal to recover that amount.

What Does a Lottery Bond Cost? 

The cost of a South Dakota lottery bond is determined through an underwriting process. While the obligee has established the formula for establishing the required bond amount, the surety will set the premium rate based on the underwriters’ assessment of the risk involved in paying claims on the principal’s behalf. The primary measure of that risk is the principal’s personal credit score.

There is a low risk that a principal with good credit will fail to repay the surety, so the premium rate will be low, potentially as low as one percent. The risk of the surety not being repaid is higher when the principal’s personal credit score is low, which warrants a higher premium rate.

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Our surety bond professionals will get you the lottery bond in South Dakota you need at a competitive rate.