Those coin-pusher or quarter-pusher machines you sometimes see at bars, fairs, and arcades. The player drops a quarter onto a moving shelf hoping to dislodge other quarters or prizes piled up on the shelf. Are these legal amusement devices in SD (subject to the 4% amusement device tax under SDCL ch. 10-58), or are they illegal slot machines and games of chance prohibited by the SD Constitution and SDCL 22-25-13?
Plain-English summary
Quarter-pusher machines (also called coin-pusher machines) are a familiar arcade fixture. A player drops a quarter into a machine. Inside the machine is a moving shelf with other quarters, money, and prizes piled on it. The shelf moves back and forth. The player's quarter lands on the pile and may (or may not) dislodge other quarters, money, or prizes, which then drop into a tray the player can collect.
These machines had been operating openly in SD: bars, fairs, carnivals, possibly some arcades. Many of them had SD Department of Revenue amusement-device registration stickers on them. The operators paid the 4% amusement-device excise tax under SDCL chapter 10-58. From the operator's perspective, the machines were just another arcade game like Pac-Man or pinball.
In 2008, the SD Department of Revenue and Regulation started asking whether the registration was appropriate. Secretary Kinsman asked the AG. The factual record showed:
- The player deposits a quarter (something of value).
- The player has limited control: a slide or wheel positions where the quarter enters.
- Once the quarter is deposited, the player has no control over its movement, the shelf movement, or the chain reaction.
- Quarters, money, and prizes may or may not be dispensed based on how the pile happens to be configured.
The AG looked at the controlling law:
SD Constitution Article III, § 25 prohibits the Legislature from authorizing "any game of chance, lottery, or gift enterprise, under any pretense, or for any purpose whatever..." (with limited constitutional exceptions like the SD lottery and certain charitable gambling).
SDCL 22-25-13 prohibits slot machines and devices. A slot machine is defined as "any machine upon the action of which anything of value is staked and which is operated by placing therein or thereon any coins, checks, slugs, balls, chips, tokens, or other articles, or in any other manner as a result of such operation anything of value is won or lost by the operation of such machine, when the result of such operation is dependent upon chance." Coin-operated nonpayout pin tables and arcade amusements with free-play features are exempt.
SDCL 22-25-14 declares slot machines public nuisances.
Bayer v. Johnson (1984) defines a "game of chance" for SD constitutional purposes as "a contest wherein chance predominates over skill."
Applying these standards to quarter-pusher machines:
- Something of value is staked (the quarter).
- Something of value is won or lost (other coins, money, prizes, depending on the chain reaction).
- The result depends predominantly on chance, not skill.
The player's limited control over where the initial coin lands gives only an "illusionary appearance of skill." Real skill (predominant skill) requires the player to control or predict the machine's operation. Once the coin is deposited, the player can't control the shelf, the pile, or the dispensing. The pile configuration at any given moment is essentially random from the player's perspective.
The AG concluded that quarter-pusher machines are illegal slot machines and unconstitutional games of chance, not amusement devices. They cannot be registered and taxed under SDCL ch. 10-58. The Department of Revenue's prior registration of these machines was inappropriate.
Three out-of-state decisions reached the same conclusion under their respective laws:
- Mississippi Gaming Commission v. Henson, 800 So.2d 110 (Miss. 2001)
- State v. Maillard, 695 N.E.2d 637 (Ind. Ct. App. 1998)
- United States v. Two (2) Quarter Fall Machines, 767 F.Supp. 153 (E.D. Tenn. 1991)
None of those courts found skill predominated over chance. The Mississippi Supreme Court and federal district court characterized the machines as illegal because there was virtually no skill involved.
The 2008 opinion's effect was significant. Quarter-pusher machines operating in SD had to come out. The Department of Revenue had to stop registering them. Law enforcement and local prosecutors had a clear AG opinion supporting seizure and prosecution under SDCL 22-25-13 (possession or operation is a Class 1 misdemeanor) and SDCL 22-25-14 (public nuisance).
Currency note
This opinion was issued in 2008. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. SD's gambling law has been amended multiple times since 2008. Some forms of electronic gaming have been authorized or further restricted. SDCL 22-25-13 and 22-25-14 should be checked directly. The general principle (chance-predominant machines are illegal slots in SD) is structural and likely stable, but specific machine designs may have evolved and individual cases would need fresh analysis.
What the opinion meant at the time
For the SD Department of Revenue and Regulation in 2008, the opinion forced an immediate change in administrative practice. The Department had been registering quarter-pusher machines under SDCL ch. 10-58. The opinion meant the Department could no longer treat them as amusement devices and could not lawfully issue registration stickers for them.
For SD bar, restaurant, fair, and carnival operators in 2008 with quarter-pusher machines on premises, the opinion was a clear notice that the machines were illegal. The machines had to come out. Continued operation exposed the operator to misdemeanor liability under SDCL 22-25-13.
For state and local law enforcement, the opinion gave a clean AG position supporting enforcement against quarter-pusher operators. Officers could seize machines as instruments of illegal slot-machine operation. State's attorneys could charge under SDCL 22-25-13 and pursue nuisance abatement under SDCL 22-25-14.
For amusement device vendors and distributors, the opinion clarified that quarter-pusher machines were not a legal product line in SD. Pin tables, arcade video games with free-play features, claw machines (with no payout in money), and similar genuine amusement devices remained legal and registrable.
For county fair and carnival organizers, the opinion meant changes in midway operations. Quarter-pushers had been a common revenue source for carnival operators. They had to be removed from SD shows. Other game booths (those with predominant skill or no payout) remained acceptable.
For arcade and family-entertainment operators, the opinion didn't disturb legitimate amusement devices. A pinball machine, a Skee-Ball game, a video arcade game (where any winnings are limited to free play or merchandise of de minimis value) all continued to operate under SDCL ch. 10-58.
Common questions
Q: What is a quarter-pusher machine?
A: A coin-operated machine with a shelf inside containing other coins, money, and prizes. The player drops a coin onto the shelf hoping to push other coins or prizes off the edge into a payout tray. The shelf moves back and forth automatically.
Q: Why are quarter-pusher machines illegal in SD when they look similar to claw machines (which are typically legal)?
A: Two reasons. First, the payout. Quarter-pushers pay out money and other things of value; legitimate claw machines pay out de minimis merchandise. Second, the chance/skill analysis. Quarter-pushers are chance-predominant. Claw machines have more genuine skill (the player aims the claw). The Bayer v. Johnson test (chance predominates over skill) is what makes a machine a "game of chance."
Q: Doesn't the player have some skill in choosing where to drop the coin?
A: The AG opinion explicitly addresses this: "The limited player control over the initial location of the quarter only gives the illusionary appearance of skill." Real skill would require the player to control or predict the machine's operation. Quarter-pushers don't allow that.
Q: What about pin tables and arcade games with free-play features?
A: SDCL 22-25-13 expressly carves these out from the slot-machine prohibition. Free-play features are not "anything of value won or lost." Pin tables (pinball) and similar coin-operated nonpayout arcade amusements remain legal.
Q: What is "something of value"?
A: Coins, currency, prizes, or anything else with cash or trade-in value. Free play credits on the same machine are typically not "something of value" in the slot-machine sense (they don't leave the machine as cash or property).
Q: What penalty does an operator face for running a quarter-pusher?
A: SDCL 22-25-13 makes possession or operation a Class 1 misdemeanor. SDCL 22-25-14 declares the machine a public nuisance. The state may seize the machine as well.
Q: Did the Department of Revenue refund taxes paid by operators who had registered quarter-pushers in good faith?
A: The opinion does not address that. As a general matter, a tax paid on illegal activity is unlikely to be refundable. Operators in this position should consult counsel.
Q: What about charitable bingo or pull-tabs?
A: Those operate under separate constitutional exceptions and statutes (charitable gambling under SDCL ch. 22-25A). Quarter-pushers are not covered by the charitable exception.
Q: What out-of-state law agrees with this opinion?
A: Mississippi Gaming Commission v. Henson (Miss. 2001), State v. Maillard (Ind. Ct. App. 1998), and United States v. Two (2) Quarter Fall Machines (E.D. Tenn. 1991) all reached the same conclusion under similar legal frameworks.
Background and statutory framework
SD constitutional gambling policy is set by SD Constitution Article III, § 25. The provision is broad: "The Legislature shall not authorize any game of chance, lottery, or gift enterprise, under any pretense, or for any purpose whatever..." The Legislature has limited authority to except certain forms (the SD lottery, charitable bingo and pull-tabs, the Deadwood gaming district, parimutuel wagering) by constitutional amendment. Outside those exceptions, games of chance are unconstitutional.
Bayer v. Johnson, 349 N.W.2d 447 (S.D. 1984), supplies the test for what constitutes a "game of chance" under Article III, § 25. The Court defined it as "a contest wherein chance predominates over skill." The "predominates" formulation is important. A game with some skill and some chance is not automatically a game of chance; chance has to predominate.
SDCL 22-25-13 and 22-25-14 are the statutory implementation. SDCL 22-25-13 defines a slot machine broadly and makes possession a Class 1 misdemeanor. SDCL 22-25-14 declares slot machines public nuisances. The carve-outs are narrow: coin-operated nonpayout pin tables and arcade amusements with free-play features.
SDCL chapter 10-58 is the amusement device tax framework. Owners and operators of mechanical or electronic amusement devices register with the Department of Revenue, pay a 4% gross-receipts excise tax, and receive registration stickers under SDCL 10-58-6. The chapter doesn't itself classify devices as legal or illegal; it taxes whatever is registered. Whether a particular device is a legitimate amusement device subject to SDCL ch. 10-58 or an illegal slot machine prohibited by SDCL ch. 22-25 is determined by the chance/skill test and the slot-machine definition.
The 2008 opinion's analysis is straightforward application of these standards to the quarter-pusher fact pattern. Stakes (the quarter), payout (other coins or prizes), chance-predominance (the shelf operation is essentially random from the player's perspective), satisfies all three elements of the slot-machine definition.
The "illusionary appearance of skill" point is important. Many illegal gambling devices include some element of player input to evade gambling laws. The Bayer v. Johnson test cuts through this: the question is whether chance predominates over skill, not whether skill exists at all. Limited player control over the initial coin position is not enough to make quarter-pushers skill-predominant.
The 2008 opinion's effect on SD enforcement was significant. Before the opinion, the registration practice had effectively legitimized quarter-pushers as amusement devices. After the opinion, the legal landscape was clear: chance-predominant payout machines are illegal slots, period. The Department of Revenue corrected its registration practice, and enforcement became feasible.
Citations and references
Constitutional provisions:
- S.D. Const. art. III, § 25 (prohibition on games of chance)
Statutes:
- SDCL ch. 10-58 (amusement device tax)
- SDCL 10-58-6 (registration stickers)
- SDCL 22-25-13 (slot machine prohibition)
- SDCL 22-25-14 (slot machines as public nuisances)
Cases:
- Bayer v. Johnson, 349 N.W.2d 447 (S.D. 1984)
- Mississippi Gaming Commission v. Henson, 800 So.2d 110 (Miss. 2001)
- State v. Maillard, 695 N.E.2d 637 (Ind. Ct. App. 1998)
- United States v. Two (2) Quarter Fall Machines, 767 F.Supp. 153 (E.D. Tenn. 1991)
Source
Original opinion text
STATE OF SOUTH DAKOTA
OFFICE OF THE ATTORNEY GENERAL
April 30, 2008
Paul Kinsman, Secretary
Department of Revenue and Regulation
445 East Capitol Avenue
Pierre, SD 57501-3185
OFFICIAL OPINION NO. 08-04
Legality of Quarter Pusher Machines
Dear Secretary Kinsman:
You have requested an opinion from this office regarding the following factual situation.
FACTS:
The Division of Property and Special Taxes administers the amusement device tax under SDCL ch. 10-58. This chapter imposes a registration requirement and a four percent (4%) excise tax on any owner or operator that receives gross receipts from the operation of mechanical or electronic amusement devices. Currently, owners and operators of amusement devices fill out a form that informs the Department of the number of amusement devices they have and pay a per device registration fee. If the appropriate fee is submitted with the form, the Department issues a corresponding number of registration stickers that are to be placed on each amusement device. The identity or type of amusement device is not stated in the filings with the Department.
It has come to the Department's attention that there are various business establishments throughout the State that have coin pusher or quarter pusher machines or devices ("quarter pusher machines"). These quarter pusher machines have Department of Revenue amusement device stickers displayed on them pursuant to SDCL 10-58-6. The Department is also aware that on occasion quarter pusher machines are available for play at various fairs and carnivals held throughout the State.
All quarter pusher machines operate in a similar manner. A player deposits a quarter into a machine containing other quarters, money and prizes that are randomly located on a shelf or shelves, on the chance that through the machine's operation the player's quarter will dislodge other quarters, money and prizes and start a chain reaction resulting in one or more quarters, money and prizes being dispensed to the player. The player, through the use of a slide or wheel, has some control over where the coin is initially deposited in the machine. Once a quarter is deposited, however, the player has no control over the operation of the quarter pusher machine. He cannot control the movement of the quarter, the movement of the other quarters, money or prizes, if or how they fall, or whether quarters, money or prizes are actually be dispensed to the player as a result of the chain reaction.
Based upon the above facts, you have asked the following question:
QUESTION: Whether quarter pusher machines are prohibited by the South Dakota Constitution or other South Dakota law as games of chance or slot machines, or are quarter pusher machines simply amusement devices to be registered and taxed pursuant to SDCL ch. 10-58?
IN RE QUESTION:
Article III, section 25 of the South Dakota Constitution prohibits games of chance except for those constitutionally excepted. Since no applicable exception applies to your opinion request, the pertinent portion of section 25 provides as follows:
The Legislature shall not authorize any game of chance, lottery, or gift enterprise, under any pretense, or for any purpose whatever...
Mechanical or electronic games of chance are generally prohibited as slot machines under SDCL 22-25-13 through 14.1. For purposes of this opinion the relevant provisions include SDCL 22-25-13 and 22-25-14. SDCL 22-25-13 provides:
No person may have in his possession, custody, or under his control or permit to be kept in any place under his possession or control, any slot machine or device. A slot machine or device is any machine upon the action of which anything of value is staked and which is operated by placing therein or thereon any coins, checks, slugs, balls, chips, tokens, or other articles, or in any other manner as a result of such operation anything of value is won or lost by the operation of such machine, when the result of such operation is dependent upon chance. This section does not extend to coin-operated nonpayout pin tables and arcade amusements, with free play features. A violation of this section is a Class 1 misdemeanor.
This section does not prohibit the manufacture, or any act appurtenant to the manufacture, of slot machines or devices in this state for distribution and sale.
SDCL 22-25-14 provides:
All slot machines capable of being used for gambling and places where they are kept or operated together with all property of any kind kept or used in connection with operation of the same, are hereby declared to be public nuisances.
This section does not prohibit the manufacture, or any act appurtenant to the manufacture, of slot machines, or devices in this state for distribution and sale.
The South Dakota Supreme Court, in Bayer v. Johnson, 349 N.W.2d 447, 449 (S.D. 1984), defined a "game of chance" for state constitutional purposes as "a contest wherein chance predominates over skill."
Based upon the facts you have provided, it is my opinion that quarter pusher machines are unconstitutional games of chance that also constitute illegal slot machines under SDCL 22-25-13. Under South Dakota law, a quarter pusher machine is illegal since: (1) something of value is staked with a coin-operated machine; (2) something of value is won or lost by the operation of such machine; and (3) whether a thing of value is won or lost is dependent predominantly on chance. The limited player control over the initial location of the quarter only gives the illusionary appearance of skill. Once the coin is deposited the player has no control over the pushing devices, shelve movement, the chain reaction, when or how quarters fall, or what quarters, money or prizes are dispensed to the player. The actual payoff depends exclusively on chance and how the coins, money or prizes are piled up on the shelf or shelves at the time the player inserts the quarters.
Given these facts, it is my opinion that chance predominates over skill. Under these circumstances, and consistent with the Court's decision in Bayer v. Johnson, these devices are not amusement devices that are subject to registration and taxation pursuant to SDCL ch. 10-58.
In reaching this conclusion, I note that there are three court decisions that have reviewed the legality of quarter pusher machines under various federal and state laws. These decisions, Mississippi Gaming Commission v. Henson, 800 So.2d 110 (Miss. 2001); State v. Maillard, 695 N.E.2d 637 (Ind. Ct. App. 1998); and United States v. Two (2) Quarter Fall Machines, 767 F.Supp. 153 (E.D. Tenn. 1991) all reached the conclusion that the machines were illegal. None of these courts found that skill predominated over chance in the operation of a quarter pushing machine. Both the Mississippi Supreme Court and District Court concluded that they were illegal devices since there was virtually no skill involved in operating the quarter pusher machines. Two (2) Quarter Fall Machines, 767 F. Supp. at 15; and Mississippi Gaming Commission, 800 So.2d at 114.
Therefore, the answer to your question is that quarter pusher machines are illegal games of chance and slot machines and not amusement games subject to regulation and tax under SDCL ch. 10-58.
Very truly yours,
LAWRENCE E. LONG
ATTORNEY GENERAL
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