South Dakota Lottery sets target for switching to new video-lottery communications system

Capitol News Bureau
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PIERRE, S.D. (KELO) — The new operating system for video lottery should be ready to go by January 25, the South Dakota Lottery Commission learned Thursday.

Clark Hepper, the state lottery’s deputy director, told commissioners in a teleconference that 25 sites along the I-90 corridor will be the test group for the new network.

“Hopefully by the end of August we’ll have a successful pilot project completed,” Hepper said.

The goal is that Scientific Games International will finish installing new equipment statewide by December and the current communication network can be shut down by January 25, according to Hepper.

He said the current COVID-19 shutdowns rippling through South Dakota communities calls for flexibility but the vendor will try to stay on schedule.

“We know that this will be a fluid process,” Hepper said.

Chairman Bill Shorma of Dakota Dunes asked whether the new system would have greater dependability.

Hepper replied that it would be “more robust” and that he expects “a significant decrease” in non-reporting terminals.

Responded Shorma: “That’s an expectation I think was built in from the start, so I hope it comes to pass.”

The machines are privately owned and operated in many of the businesses that have licenses to sell alcohol for consumption on site. State government takes half of the net amount that players lose in the machines.

There were 1,338 licensed establishments and 9,027 licensed machines during the 2019 fiscal year that ended June 30, according to information presented to the Legislature’s Joint Committee on Appropriations.

Video lottery revenue totaled nearly $114 million for state government in 2019, the second-largest source of state general funds after the sales and use tax.

The next step in the conversion is setting up a testing process with Gaming Laboratories International, Hepper said. The timeline currently calls for testing to be done by July.

Scientific Games would have operators trained by the end of July and the test group would start running on the new system in August, Hepper said.

Earlier in the meeting, commissioner Jamie Huizenga of Pierre asked whether video lottery receipts had been affected by the coronavirus pandemic.

Lottery director Norm Lingle said, “There is a little bit of a trend downward on that.”

State Revenue Secretary Jim Terwilliger said he expects the situation will deteriorate but it was “too early” to tell how far.

Shorma said he has praised video lottery businesses in the North Sioux City area for trying to keep players safe, such as by wiping down machines after a player is done.

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