December 21, 1989

Mr. Ralph A. Kemnitz
Haakon County State's Attorney
P.O. Box 49
Philip, South Dakota 57567-0489

OFFICIAL OPINION NO. 89-38

Video coupon machine

Dear Mr. Kemnitz:

You have requested an official opinion from this office with regard to the following factual situation.

FACTS:

An individual is proposing to market a coin-operated video machine that would permit people to purchase a coupon to a specific business. The machine would allow a person to view the selection of three or more coupons. The coupon would state the name of the business and the percentage or dollar amount discount that it could be redeemed for. All this information is available to the viewer prior to inserting any money.

For example, the video display may offer a coupon for $1.00 off an oil change at ABC Oil Company, a coupon for $2.00 off Reo Coffee at Joe's Supermarket, or a coupon for 10% off any meal at the Corner Diner. After viewing the choices available, if a person wanted to purchase one of the coupons, they would insert a certain sum, usually a quarter dollar into the machine, and select the specific coupon they are interested in. The coupons are always worth more at redemption than the sum paid to obtain them.

The display of coupons does not remain constant. The video display will change from time to time. The coupons that appear on the screen are selected at random by the machine.

Based upon the foregoing facts, you have asked the following question.

QUESTION:

Is the machine described above a form of lottery machine, slot machine, gambling device, amusement device or a lawful vending machine?

SDCL 42-7B-4(21) defines a slot machine. The important part of the definition as it applies to this question is where it states, "whether by reason of the skill of the operator or application of the element of chance, or both, may deliver or entitle the person playing or operating the machine to receive cash premiums, merchandise, tokens . . ." Since the facts clearly show that the coupon machine does not require any element of chance or skill on behalf of the operator, it does not fall within the definition of a slot machine.

A video lottery machine is defined in SDCL 42-7A-2(13). From that definition, the video lottery machine is likewise distinguished from the coupon machine on the basis of "chance."

The video coupon machine would not qualify as a "coin operated machine for amusement" because it does not have a free play feature as defined in SDCL 22-25-13.

From all its appearances, the video coupon machine would be classified as a vending machine. This determination is based on the following factors:

1. The purchaser can decide if he wants to select one of the coupons available prior to inserting his coin;

2. The redeemed coupon is always worth more than the cost of obtaining it;

3. There is no element of chance or skill on the part of the operator.

In response to your question, it is my opinion that the video coupon machine that you describe is a vending machine similar in function to a candy machine. As a result, this machine should not be subject to any additional regulation other than is generally applied to vending machines.

Respectfully submitted,

ROGER A. TELLINGHUISEN
ATTORNEY GENERAL

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