Alcohol Licenses for Video Lottery Establishments

By: the South Dakota Department of Revenue

By definition, a business may not be licensed as a video lottery establishment unless it is a bar or lounge licensed to sell alcoholic beverages for on-premises consumption.1 State law further defines a bar or lounge as an enterprise primarily maintained and operated for the selling, dispensing, and consumption of alcoholic beverages on the premises.2 Therefore, each video lottery licensed establishment must obtain its own sales tax license and its own on-sale alcoholic beverage license, even if there are multiple establishments in the same building. Each licensed establishment must also abide by all alcoholic beverage laws and video lottery laws.

​South Dakota law limits the number of video lottery machines to no more than ten in any licensed establishment.3 Some video lottery machine operators are offering more than ten video lottery machines under one roof by creating multiple licensed establishments within the building.

In addition to any video lottery requirements for multiple establishments under one roof, several alcoholic beverage laws must be considered to ensure compliance under this scenario.

• Since the law requires selling and dispensing alcohol, each licensed establishment must maintain an inventory of alcoholic beverages and have point-of-sale capability. One bar area may not service multiple licensed establishments.
• The inventory of alcoholic beverages must be stored within each licensed establishment.4 There cannot be one common storage area or cooler to store the alcoholic beverages for all licensed establishments.
• Each licensed establishment may only receive alcoholic beverages directly from an alcoholic beverage wholesaler.5 Multiple licensed establishments under one roof may not order in bulk, share, or trade alcoholic beverages.
• Patrons of the licensed establishment cannot carry alcoholic beverages from one licensed establishment to another.6 Each licensed establishment must have controls in place to ensure alcoholic beverages do not leave the licensed premises where they were sold.

In short, the alcoholic beverage laws do not vary simply because there is common ownership of multiple licensed establishments under one roof. Each licensed establishment must be treated individually, just as if it were across town with different ownership.

Failure to comply with the alcoholic beverage laws may result in suspension or revocation of any alcoholic beverage licenses,7 and the loss of video lottery privileges.

For questions about alcoholic beverage laws, call the Department of Revenue at (800) 829-9188 ext. 1. Questions about lottery laws may be directed to the South Dakota Lottery at (605) 773-5770.

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1  SDCL 42-7A-1 (6)
2  SDCL 42-7A-37.1
3  SDCL 42-7A-44
4  SDCL 35-1-9
5  SDCL 35-4-60
6  SDCL 35-1-5.6
7  SDCL 35-2-10