S.C. Code Ann. § 59-150-230 – Lottery prizes; income tax; attachments, garnishments, or executions; validity of winning tickets or shares; discharge of liability; commission members excluded; lottery machines; unclaimed prizes

(A) Lottery prizes are subject to the South Carolina state income tax. Residents and nonresidents of this State who receive a lottery prize in excess of five hundred dollars are subject to a mandatory withholding of state income tax as required by law. Federal income tax must be withheld from lottery prizes in excess of five thousand dollars. Neither the State nor a county, municipality, or other political subdivision of this State may impose a tax on the sale of a lottery ticket or share or on the payment of a prize pursuant to this chapter; nor may a county, municipality, or other political or public subdivision assess an ad valorem tax against a lottery ticket or share bought or sold pursuant to this chapter.
(B) Except as otherwise provided in this chapter, attachments, garnishments, or executions authorized and issued pursuant to law must be withheld if timely served upon the commission. This subsection does not apply to a lottery retailer.
(C) The commission shall promulgate regulations and adopt policies and procedures to establish a system of verifying the validity of lottery games tickets or shares claimed to win prizes and to effect payment of prizes.
1. (1) A prize, a portion of a prize, or a right of a person to a prize awarded is not assignable except as provided in this section. A prize or a portion of a prize remaining unpaid at the death of a prize winner must be paid to the estate of the deceased prize winner or to the trustee of a trust established by the deceased prize winner as settlor if a copy of the trust document or instrument has been filed with the commission with a notarized letter of direction from the settlor and no written notice of revocation has been received by the commission before the settlor's death. Following a settlor's death and before payment to a trustee, the commission shall obtain from the trustee a written agreement to indemnify and hold the commission harmless with respect to claims that may be asserted against the commission arising from payment to or through the trust. Notwithstanding any other provisions of this section, a person, pursuant to an appropriate judicial order, may be paid the prize to which a winner is entitled.
2. (2)
  1. (a) The commission must establish a prize structure for each lottery game that is based upon sound actuarial principles and does not rely upon proceeds generated from future or other lottery games. The commission may establish a lottery reserve fund to further accomplish this purpose. The monies in the restricted account may be used only for the purpose of making deferred payments of a lottery game prize as elected by a prize winner.
  2. (b) For the purpose of Section 59-150-230, the amount of withholding is based on the total prize value but the payment of withholding tax must be adjusted according to the payment schedule for the prize.
3. (3) A prize must not be paid if it:
  1. (a) arises from claimed lottery game tickets that are stolen, counterfeit, altered, fraudulent, unissued, produced or issued in error, unreadable, not received, or not recorded by the commission within applicable deadlines;
  2. (b) lacks captions that conform and agree with the play symbols as appropriate to the particular lottery game involved; or
  3. (c) fails to comply with additional specific regulations and public or confidential validation and security tests of the commission appropriate to the particular lottery game involved.
4. (4) A particular prize in a lottery game must not be paid more than once, and if more than one person is entitled to a particular prize, the sole remedy of those persons is the award to each of them of an equal share in the prize.
5. (5) A holder of a winning lottery game ticket or share from a lottery game or multi-state or multi-sovereign lottery game must claim a cash prize within one hundred eighty days after the drawing in which the cash prize was won. In a South Carolina lottery game in which the player may determine instantly if he has won or lost, he must claim a cash prize within ninety days after the end of the lottery game. If a valid claim is not made for a cash prize within the applicable period, the cash prize is an unclaimed prize for purposes of this chapter.
(D) A prize must not be paid upon a lottery game ticket or share purchased or sold in violation of this chapter and is an unclaimed prize for purposes of this section.
(E) The commission is discharged of all liability upon payment of a prize.
(F) A lottery game ticket or share must not be purchased by and a prize must not be paid to a member of the board, an officer or employee of the commission, or a spouse, child, brother, sister, or parent residing as a member of the same household in his principal place of residence. A lottery game ticket or share must not be purchased by and a prize must not be paid to an officer, employee, agent, or a subcontractor of a lottery vendor, or a spouse, child, brother, sister, or parent residing as a member of the same household in his principal place of residence if he has access to confidential information that may compromise the integrity of the lottery.
(G) A lottery prize must not be paid to a person who is incarcerated. A lottery prize payment received in violation of this subsection must be returned immediately and in full to the commission.
(H) The use of an electronic or mechanical machine designed for a lottery game authorized pursuant to this chapter must be limited to a lottery retailer and their employees only in order to facilitate retail sales of lottery tickets, and such a machine must not dispense as a prize coins or currency. The operation of the lottery games excludes machines and lottery games, including video poker lottery games, prohibited by Sections 12-21-2710, 16-19-40, and 16-19-50.
(I) Unclaimed prize money must be deposited in the Education Lottery Account each year. A portion of the unclaimed prize money, in an amount to be determined by the General Assembly in its annual general appropriations bill and other bills appropriating monies for previous or current fiscal years, must be allocated to the Department of Education for the purchase of new school buses. A portion, in an amount to be determined by the General Assembly, of the unclaimed prize money in the Education Lottery Account, must be allocated by the General Assembly in its annual general appropriations bill or any bill appropriating monies for previous or current fiscal years to the South Carolina Department of Alcohol and Other Drug Abuse Services or an established nonprofit public or private agency recognized as an affiliate of the National Council on Problem Gambling to receive monies from the fund for the prevention and treatment of compulsive gambling disorder and educational programs related to that disorder, including a gambling hotline, to be used for prevention programs including, in part or in totality, mass media communications. Nothing in this section prevents the State Budget and Control Board from contracting with any combination of agencies which meet the criteria provided for in this section, including a combination that includes the Department of Alcohol and Other Drug Abuse Services for the treatment of compulsive gambling disorder and educational programs related to that disorder, including a gambling hotline. Semi-annually, the director of the selected agency shall report to the board on the programs implemented with these funds, including nonidentifying statistical information pertaining to persons served by these programs. The director of the agency also shall provide a copy of the report to the General Assembly promptly upon receipt of the semi-annual reports.