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South Dakota at a Glance
Gaming License: Yes
Non-Gaming License: No
Vendor License Exemptions Available: No
Temporary License: Yes
Ownership Disclosure Threshold: 5%
Institutional Investor Waiver: No
Fees: $150 - $5,000
State Gaming Lab: Private
Term of License: 1 Year
Deadline to Reapply: Before the End of the Fiscal Year
Political Contribution Restrictions: No

South Dakota Commission on Gaming

gaming.sd.gov
More South Dakota Commission on Gaming Info

South Dakota Gaming Supplier Regulatory Overview


The state of South Dakota legalized limited stakes card gaming and slot machines in 1989. All commercial gaming in the state is legally confined to the city of Deadwood, approximately 60 miles from Mt. Rushmore.

South Dakota requires that all slot manufacturers and distributors be licensed through the South Dakota Gaming Commission ("Commission"). Interested persons should note that the Commission has a single application form for all slot manufacturer and distributor license applications for businesses. Therefore, there may be portions of the application that do not apply to specific applicants.

Slot Machine Manufacturer or Distributor Requirements

Persons or entities seeking to be licensed as a slot machine manufacturer or distributor must complete the South Dakota Commission on Gaming Application Form. This application is used by all license applicants. Accordingly, the following information relates solely to those interested in becoming licensed as a manufacturer, distributor, or supplier of equipment to licensed gaming facilities.

Duration

A license is valid for one year and must be renewed before the end of each fiscal year (June 30).

Fees

The applicant must submit a $5,000 application fee with its initial application.1 Upon issuance, the applicant must pay a $1,000 licensing fee. Renewal fees are $250 per year.

Application

In order to complete the South Dakota Commission on Gaming Application Form, the following information is necessary:

1. Basic identity information;
2. Tax ID number;
3. Incorporation information, if applicable;
4. Business description;
5. Identity of all partners, directors, officers, and key employees;
6. Terms, positions, and rights of each class of securities issued;
7. Options on securities issued; and
8. Bankruptcy history.2

In addition, the following documents must be attached and submitted with the application:

1. Tax returns, past three years;
2. Contracts relating to the applicant's gaming business;
3. Bank and brokerage statements, past 12 months;
4. Copy of all notes and mortgages;
5. Most recent financial statements;
6. Articles of incorporation/partnership agreements;
7. Stock certificates owned;
8. Life insurance policies, including cash value;
9. List of stockholders;
10. Most recent IRA, 401(k), or retirement plan, including cash value; and
11. Fingerprints.3


Principal Licensing Requirements

Principal employees of a manufacturer or distributor are defined as those individuals holding 5 percent or more of the interest in the applicant company. These individuals must complete the Personal History Information Form contained in the South Dakota Commission on Gaming Application Form.

Application

Key Employees must complete the Personal History Information Form contained within the South Dakota Commission on Gaming Application Form. The following information is necessary to complete this portion of the application:

1. Basic identity information;
2. Residence, past 20 years;
3. Citizenship information;
4. Marriage information;
5. Family information;
6. Military history;
7. Civil, criminal, and regulatory action history;
8. Employment history, since age 18;
9. Identity of five character witnesses, known at least five years and who are not related to or work with the applicant;
10. Professional and gaming licenses held; and
11. Financial history and statement of assets/liabilities.4

In addition, the following documents must be submitted in connection with the Personal History section of the application:

1. Tax returns, past three years;
2. Contracts relating to the applicant's gaming business;
3. Bank and brokerage statements, past twelve 12 months;
4. Copy of all notes and mortgages;
5. Most recent financial statements;
6. Stock certificates owned;
7. Life insurance policies, including cash value;
8. Most recent IRA, 401(k), or retirement plan, including cash value; and
9. Fingerprints.5

Key Employee License Application

Key employees of licensed entities must be licensed. A key employee is any executive, employee, or agent of a gaming licensee who has the power to exercise significant influence over gaming operations within the licensee.

Duration

The license is valid for one year and must be renewed before the end of each calendar year (December 31).

Fees

All key employees must submit a $150 application fee. Upon licensure, the applicant must pay an additional $150 license fee. Renewal fees of $75 are due January 1 of each year after licensure is issued.6

Application

All key employees must complete the Key Employee Application. The following information is necessary to complete the application:

1. Basic identity information;
2. Citizenship information;
3. Marriage information;
4. Family information;
5. Education history;
6. Military history;
7. Civil, criminal, and regulatory action history;
8. Residence information, past 10 years;
9. Employment history, past 10 years;
10. Identity of three character references, known at least five years and who are not related to or work with the applicant;
11. Professional and gaming licenses held;
12. Bankruptcy history;
13. Financial history; and
14. Net worth statement.7

In addition, the following documents are required to complete the application:

1. Tax returns, past three years; and
2. Fingerprints.8

Gaming Technology Standards

All testing of slot machines is conducted by Gaming Laboratories International ("GLI"). Each manufacturer is responsible for having its machines tested and must bear the cost of the inspection and certification by GLI. Field trials and other testing may be conducted by the Commission.9

Certain physical gaming equipment (e.g., card tables) must conform to specific standards established in the Administrative Rules.10

Licensing Process

A temporary license may be issued by the Commission pending a formal background investigation into the applicant.11

Interested applicants must visit the Commission website or contact the Commission in order to obtain the proper forms. After submitting the applicable forms and fees, the Commission will review the information and attachments. A formal background check will be conducted and the applicant may be required to meet with Commission staff.

After the application has been reviewed, the Commission may approve or deny issuance of a license.

Personal History portions of license applications may not be withdrawn without permission from the Executive Secretary of the Commission.12

Disclosure and Reposting Requirements

Before License Is Issued

Applicants must accurately disclose all information requested by the Commission during the licensing process.13

After License Is Issued

Applicants may be penalized if they fail to file a return or report required to be filed with the Commission within 15 days of the date of return or report. Penalty will be waived if Commission deems excusable cause for delay of filing of report or return.14 Reports include all material documents submitted by publicly traded corporations to the Securities and Exchange Commission ("SEC").15

Manufacturer or distributors of slot machines are required to maintain all documentation for at least five years regarding transportation of any slot machines into the state of South Dakota. For persons shipping slot machines into South Dakota, a copy of the shipping invoice must be retained and contain the following information for each machine transported:

1. Serial number;
2. Destination; and
3. Description of machine.16

For any persons receiving a slot machine in South Dakota, the following records must be kept on file:

1. Location of each machine;
2. Serial number; and
3. Description of machine.17

Any slot machine that is transported into South Dakota must be reported to the Commission within at least 24 hours of movement of the machine.18

Any method of cheating or otherwise compromising the integrity of a gaming machine that is discovered by a slot machine manufacturer or distributor must be reported to the Commission within 14 days of its discovery.19

Reapplying for a Denied License

An applicant who is denied a Supplier's License must wait one year from the date of denial before reapplying for the license. If the applicant is then denied a second time, applicant must wait three years from the time of the second denial to reapply for the Supplier's License.20
1'South Dakota Commission on Gaming Application Form,' p. 1.
2South Dakota Commission on Gaming Application Form.'
3'South Dakota Commission on Gaming Application Form.'
4'South Dakota Commission on Gaming Application Form.'
5Id.
6SDCL. 42-7B-22.
7'Key Employee Application Form.'
8'Key Employee Application Form.'
9See ARSD 20:18:18:01 et seq.
10See ARSD 20:18:19:01 et seq.
11ARSD 20:18:07:01.
12'South Dakota Commission on Gaming Application Form,' p. 1-P.
13See SDCL 42-7B-19.2; ARSD 20:18:07:04.
14SDCL. 42-7B-31.
15ARSD 20:18:30:01.
16SDCL. 42-7B-39.
17SDCL. 42-7B-39.
18SDCL. 42-7B-39.
19ARSD 20:18:13:04.
20SDCL. 42-7B-19.1.

This article is provided by Regulatory Management Counselors, P.C. For information about the services they provide please visit our information on gaming licensing and compliance advisors.