Where the Money Goes

Since 1987, the Lottery has raised more than $1.5 billion for all South Dakotans.

How was it used?

The South Dakota Lottery funds education, lowers property taxes, and develops natural resources.

Funding Education

The Lottery has provided more than $382 million to the state General Fund.  Each year, half of the entire General Fund is used to support local K-12 schools and state universities and technical institutes.

Lowering Property Taxes

The Lottery has provided more than $1.1 billion to the Property Tax Reduction Fund, which reduces local property taxes on owner-occupied and agricultural land by 30%.

Developing Natural Resources

The Lottery has provided more than $26 million to the Capital Construction Fund.  Local communities use these funds to pay for rural water systems, community drinking water and wastewater improvement projects, and recycling and waste disposal programs.

These benefits represent the leading use of the three state funds that receive Lottery revenues.  A detailed description of each Lottery product’s beneficiary funds follows.

Lottery revenues come from the sale of scratch tickets, lotto tickets and video lottery play.

Scratch Tickets

All revenue from the sale of scratch tickets is transferred to the state General Fund.  Scratch ticket sales have raised more than $69.9 million for the General Fund.

Lotto Tickets

Currently, the first $1.4 million of revenue from the sale of lotto tickets goes to the state General Fund.  Any additional revenue is transferred to the Capital Construction Fund.

Lotto ticket sales have raised more than $37.4 million for the General Fund and more than $26.2 for the Capital Construction Fund.

The current distribution of revenues took effect in state fiscal year 1997.  In previous years, lotto ticket revenues were transferred to the General Fund, where they were dedicated for corrections facility construction.

Video Lottery

Revenue generated by video lottery play is called Net Machine Income (NMI).  NMI is calculated as cash put into the machines minus prizes cashed out (cash in – prizes out = NMI).  The state currently receives 50% of NMI.  The private machine owners (licensed operators) receive the other 50%.

The state’s share of NMI is currently transferred to the Property Tax Reduction Fund (49.5% of NMI).  A small amount is kept by the Lottery for operation costs (0.5% of NMI).

Revenue from video lottery play has raised more than $1.1 billion for the Property Tax Reduction Fund.

Licensing fees for video lottery operators, establishments, and machine manufacturers and distributors are transferred to the state General Fund.  The state’s share of NMI was originally transferred to the General Fund.  The current distribution to the Property Tax Reduction Fund began in state fiscal year 1997.

Revenue from video lottery has raised more than $274.7 million for the General Fund.

How are the funds used?

General Fund

The General Fund is state government’s general spending account and supports public and higher education, programs like Medicaid and Temporary Assistance to Needy Families, human services facilities, and the corrections and court systems.

The state Bureau of Finance & Management website provides a summary of General Fund receipts and expenditures for the current state fiscal year.

Capital Construction Fund

The Capital Construction Fund is a temporary stop for monies destined for other state funds:

71.8% is sent to the Water & Environment Fund. This fund is used for rural water system development; provide loans and grants to local communities for drinking water and wastewater improvement projects; recycling, solid waste disposal and waste tire projects; and regional landfills.  These funds were appropriated for the current state fiscal year in House Bill 1245.  More information on natural resource development projects is available from the Dept. of Environment & Natural Resources.

25.6% is sent to the Ethanol Fuel Fund.  This fund provides $7 million in annual production payments to qualified South Dakota ethanol producers.

2.6% is sent to the State Highway Fund, which is currently used for construction and maintenance of state highways and bridges and for public transportation.  More information about the state highway system and public transportation is available from the Dept. of Transportation.

A portion of the Capital Construction Fund was previously sent to the Public and Special Transportation Assistance Fund.

Property Tax Reduction Fund

The Property Tax Reduction Fund is used to reduce local property taxes on owner-occupied and agricultural land by 30%

The Property Tax Reduction Fund is used to replace local property tax revenue for K-12 schools thereby lowering local property tax levies.  A detailed explanation is provided in the publication Your Property Taxes, available from the Dept. of Revenue & Regulation along with other property tax information publications.