Any convenience store, grocery chain, bar or gas station that wants to sell state lottery tickets has to apply for a retailer license from its state lottery commission. Before that license is issued, the lottery runs a background check, but not on the clerk who will scan tickets at the counter. The check is aimed at the people who own and control the business. Understanding who actually gets screened, what the check looks at, and where the lottery’s responsibility stops and the retailer’s own hiring responsibility begins saves a lot of confusion for store owners and store managers alike.
Who the lottery actually screens
State lottery licensing rules focus on ownership and control, not on the front line staff. The South Dakota Lottery’s retailer rules require an Individual History Form and an Investigation Authorization Form for “every partner, member, manager, director, and officer of the applying entity, and every stakeholder of 5 percent or more in the person, including a parent or subsidiary corporation,” according to the South Dakota Lottery’s retailer application guidance. That is a broad net around the ownership and management structure of the business, but it does not reach the part time cashier.
North Dakota structures it a little differently but lands in the same place. The North Dakota Lottery’s retailer page states that “the general manager of each retail location must complete a North Dakota Record/Credit Check Form,” and that a new form is required whenever a retail location gets a new general manager. North Dakota also warns applicants directly that incomplete forms, signatures or fees “may be disqualified or held for further information,” which is a reminder that the paperwork itself is part of the review, not a formality around it.
What the background check covers
The two pieces most state lotteries build the check around are criminal history and financial standing. South Dakota’s retailer guidance says plainly that “the South Dakota Lottery is using the Federal Bureau of Investigation to conduct background investigations,” using “state and federal fingerprint cards for Lottery employees, new applicants, current licensees and vendors.” That means a name based check is not the end of it in every state. Some lotteries fingerprint the people named on the application and run that print through state and FBI records rather than relying on a name search alone.
Financial and tax standing is reviewed too. South Dakota’s application checklist includes completing a W-9 Taxpayer Identification Number verification form alongside the individual history paperwork, and North Dakota’s process is built around a form the state itself calls a “Record/Credit Check.” A lottery is, after all, handing a licensee the ability to hold and remit the state’s gaming revenue, so the state wants to know whether the people behind the business have unresolved tax debt or a credit history that raises a flag before it trusts them with that money.
| Check element | South Dakota Lottery | North Dakota Lottery |
|---|---|---|
| Who is screened | Every partner, member, manager, director, officer and any 5 percent or greater stakeholder | The general manager of each retail location named on the license |
| Criminal history method | FBI background investigation using state and federal fingerprint cards | State record check tied to the Record/Credit Check Form |
| Financial review | W-9 Taxpayer Identification Number verification | Credit check component built into the same Record/Credit Check Form |
| Trigger for a new check | New application or change in listed owners, officers or stakeholders | New application or a new general manager at an existing location |
| Ongoing requirement | Current licensees and vendors also go through the process | Annual license renewal, separate from the record check itself |
Disqualifying offenses and what can hold up a license
Every state lottery sets its own disqualifying criteria in its own statute and administrative rules, so there is no single national list of offenses that bars someone from holding a retailer license. What is consistent across most states is the general shape of the review. A felony conviction, a conviction tied to gambling, theft or fraud, or a significant unresolved tax debt is the kind of history that commonly draws scrutiny or a denial, but whether a specific past conviction disqualifies a specific applicant depends on that state’s own lottery statute, how long ago the conviction occurred, and whether the state lottery commission has discretion to review the circumstances. An applicant who has a criminal record and wants a clear answer should ask their own state lottery licensing division directly rather than assume a rule from another state applies to them.
Incomplete paperwork causes almost as many delays as a criminal history finding does. North Dakota’s own retailer guidance flags this directly, warning that applications missing forms, signatures or fees may be disqualified or held pending more information. That is a practical point for any business owner working through the process: the individual history, record check and tax verification forms for every named owner and officer have to be complete and signed before the lottery will move the file forward.
Employees who sell tickets are a different question
This is the part that trips up a lot of store owners. The lottery’s background check is built around the license holder, meaning the owners, officers, directors, managers and major stakeholders of the retail business, not the cashier who rings up a scratch ticket sale at 9pm. Neither the South Dakota nor the North Dakota retailer guidance describes the lottery running a background check on hourly sales clerks, and that pattern holds across most state lottery programs. The lottery’s interest stops at the people who control the licensed business and the money that flows through it.
That does not mean a clerk who sells lottery tickets is unscreened by definition. It means any screening of that clerk is the retailer’s own decision as an employer, made under the retailer’s own hiring policy rather than under the lottery’s licensing rules. A convenience store or grocery chain that wants a criminal history check on the employees who will have access to the cash drawer and the lottery terminal is free to run one, and many retailers do, but that check is a private employment decision, separate from the license the lottery itself issues to the business.
FCRA rules when the retailer screens its own clerks
When a retailer decides to run its own background check on a cashier or store clerk through a consumer reporting agency, that check is covered by the Fair Credit Reporting Act, not by lottery licensing law. The retailer, acting as the employer, has to provide a clear and conspicuous standalone disclosure and get the applicant’s written authorization before ordering the report. The permissible purpose and disclosure requirements for an employment background check are set out at 15 U.S.C. 1681b, which governs when a consumer report can be obtained and used for employment purposes.
If anything in the report leads the retailer toward not hiring or not continuing to employ the clerk, the retailer has to follow the FCRA’s adverse action steps: a pre-adverse action notice with a copy of the report and a summary of rights, a reasonable amount of time for the applicant to respond, and then a final adverse action notice if the decision stands. The model summary of rights and related FCRA notice requirements that consumer reporting agencies and the businesses that use their reports must follow are detailed in the Federal Trade Commission’s regulations at 16 CFR Part 698. None of this is run by the lottery. It is the retailer’s own compliance obligation, separate from, and in addition to, whatever licensing check the lottery performs on the business owners.
A background check company that works with convenience stores, grocery chains and other lottery retailers can help build that clerk level screening process correctly, including the disclosure and authorization forms and the adverse action notices the FCRA requires, through a service like Reveal Background.
Renewal is not a one time event
A retailer license is not screened once and then left alone for the life of the business. North Dakota’s retailer guidance describes an annual license renewal cycle with its own renewal fee and licensing agreement, and separately requires a brand new Record/Credit Check Form any time the location gets a new general manager, regardless of where that renewal cycle falls. South Dakota’s guidance similarly notes that current licensees, not only new applicants, go through the FBI based background process. In practice, that means a change in who runs a store, or who sits on its ownership structure, can trigger a fresh round of the same screening a brand new applicant would go through, even if the store has sold lottery tickets for years.
What this means for a store with ownership changes
If a licensed retailer sells the business, brings in a new partner, or hires a new general manager, that change in the people named on the license is generally what reopens the background check, not the calendar date of the license itself. A business that is buying or selling a lottery licensed location should plan for that review to happen as part of the transaction, and should expect the new owner or manager to submit their own individual history and record check paperwork before the license can transfer or continue.
Frequently asked questions
Does the state lottery background check cover every employee who sells tickets?
No. Lottery licensing checks are built around the owners, officers, directors, managers and major stakeholders named on the license application, not the hourly staff who sell tickets at the register. A retailer that wants its clerks screened has to run its own employment background check separately.
Who has to pass the background check to get a lottery retailer license?
It depends on the state, but the pattern is consistent. South Dakota requires it of every partner, member, manager, director and officer of the business, plus any stakeholder holding 5 percent or more. North Dakota requires it of the general manager named on each retail location’s license.
What shows up in a lottery retailer background check?
Most state lottery checks combine a criminal history review, sometimes based on fingerprints run through state and FBI records, with a financial or tax status review, such as a credit check or taxpayer identification verification.
Can a felony conviction disqualify a lottery retailer license applicant?
It can, but the exact disqualifying offenses and how much discretion the lottery has to consider the circumstances vary by state law. An applicant with a criminal record should ask their own state lottery licensing division how a specific conviction is treated.
Does the background check happen again when the license is renewed?
Renewal and the background check are generally separate processes, but a change in who owns or manages the licensed business, such as a new general manager, typically triggers a fresh record or background check regardless of the renewal date.
What FCRA rules apply when a retailer runs its own background check on a clerk?
The retailer has to provide a standalone disclosure, get written authorization before ordering the report, and follow the pre-adverse and adverse action notice steps if the report leads to a decision not to hire or to end employment. These are employer obligations under the Fair Credit Reporting Act, separate from the lottery’s own licensing review.
For related screening questions, see our guides on liquor license background checks and FCRA permissible purpose for background checks.
This article is general information, not legal advice. Lottery licensing rules vary by state and change over time, so retailers and applicants should confirm current requirements with their own state lottery commission.
