THE STATE OF SOUTH CAROLINA 

In The Court of Appeals 

Kevin Cox, on behalf of himself and all others similarly 

situated, Appellant, 

v. 

South Carolina Education Lottery Commission d/b/a 

South Carolina Education Lottery, and Intralot, Inc., 

Respondents. 

Appellate Case No. 2019-000501 

Appeal From Lee County 

Kristi F. Curtis, Circuit Court Judge 

Opinion No. 6012 

Heard November 9, 2022 – Filed August 9, 2023 

AFFIRMED 

Joseph Clay Hopkins, of Charleston, for Appellant. 

William Stevens Brown, V, and Miles Edward Coleman, 

both of Nelson Mullins Riley & Scarborough, LLP, of 

Greenville, for Respondent South Carolina Education 

Lottery Commission. 

Joseph Preston Strom and Bakari T. Sellers, both of 

Strom Law Firm, LLC, of Columbia; and Mario Anthony 

Pacella, of Strom Law Firm, LLC, of Brunswick, 

Georgia, all for Respondent Intralot, Inc. 
 

 

 

 

 

 

 

 

 

VINSON, J.: Kevin Cox, on behalf of himself and all others similarly situated, 

appeals the circuit court's orders granting the South Carolina Education Lottery 

Commission's (SCELC's) and Intralot, Inc.'s1 (Intralot's; collectively, 

Respondents') motions to dismiss for failure to exhaust administrative remedies. 

We affirm. 

FACTS AND PROCEDURAL HISTORY 

Cox filed a summons and putative class action complaint in February 2018, and an 

amended class action complaint in June 2018, alleging he purchased five Mega 

Millions2 lottery tickets that he later discovered included four duplicate tickets. He 

estimated the purported class included at least 100,000 individuals with at least 

$100 in damages incurred as a result of Respondents' alleged misconduct.3 The 

amended complaint raised the following four causes of action against Respondents: 

unjust enrichment, breach of contract and breach of implied contract, promissory 

estoppel, and violation of the South Carolina Unfair Trade Practices Act 

(SCUTPA).4 Under Cox's causes of action for unjust enrichment and promissory 

estoppel, he specifically sought damages for the purchase of winning tickets. The 

amended complaint also raised a cause of action for negligence and gross 

negligence against Intralot, although Cox noted he specifically denied there was a 

printing error on the tickets. 

Respondents filed motions to dismiss. SCELC argued, inter alia, the circuit court 

lacked jurisdiction over Cox's claims because he failed to exhaust his 

administrative remedies, some or all of his claims were barred by the doctrine of 

sovereign immunity, and the amended complaint failed to assert a cause of action 

upon which relief could be granted. Specifically, SCELC argued the South 

Carolina Education Lottery Act (the Act)5 and SCELC regulations required any 

lottery player aggrieved by an action or decision of SCELC to first file a formal 

written complaint with SCELC's executive director. Thereafter, a player wishing 

to challenge the executive director's decision must appeal to the SCELC board 

within fifteen days of receiving the executive director's written decision and may 

1 Intralot is a private company that provided administrative and technical services 

to SCELC. 

2 Mega Millions is a multi-state lottery game. 

3 It is unclear from the record on appeal whether the circuit court certified the class. 

4 S.C. Code Ann. §§ 39-5-10 to -730 (2023). 

5 S.C. Code Ann. §§ 59-150-10 to -410 (2020 & Supp. 2022). 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

appeal the board's decision to the administrative law court (the ALC). Because 

Cox failed to allege he had exhausted his administrative remedies through this 

procedure, SCELC contended Cox's suit was premature and should be dismissed 

on that ground. Further, SCELC argued the doctrine of sovereign immunity barred 

Cox's unjust enrichment and promissory estoppel claims. It asserted the Tort 

Claims Act (the TCA)6 does not include a waiver of sovereign immunity for such 

equitable claims. Finally, SCELC argued that under section 59-150-230(C)(3),7 it 

was prohibited from paying the purported prize money on the Mega Millions 

tickets at issue because they were unissued, or conversely, produced or issued in 

error. It asserted this statutory prohibition was also fatal to Cox's breach of 

contract and implied breach of contract claims because misprinted tickets could not 

form the basis for these claims. 

Intralot argued Cox's complaint should be dismissed because he failed to exhaust 

his administrative remedies—incorporating by reference SCELC's administrative 

remedy argument—and failed to state a claim for which relief may be granted 

against Intralot. Intralot first argued Cox's unjust enrichment claim failed because 

he failed to plead any facts establishing a contractual relationship with Intralot, 

either express or implied. Second, it argued Cox's breach of contract and breach of 

implied contract claims failed for lack of standing when Cox did not allege Intralot 

was involved in the approval of lottery ticket retailers or the sale of lottery tickets 

or that he was in privity with Intralot. Third, Intralot argued Cox's promissory 

estoppel claim failed because he did not allege reliance on a negligent 

misrepresentation made by Intralot regarding payments for winning lottery tickets. 

Lastly, Intralot argued Cox's negligence cause of action failed because Cox did not 

include any factual allegations in his amended complaint demonstrating Intralot 

owed him a duty of care or establishing a breach of any such duty. 

In response to Respondents' motions to dismiss, Cox filed a memorandum only in 

opposition to SCELC's motion. Cox first argued he was not required to exhaust his 

administrative remedies because the Act's grievance procedure was not applicable 

to his claim. He asserted his amended complaint did not allege there was an error 

in the system that produced the duplicate lottery tickets and therefore, section 

59-150-230(C)(3)(a), which prohibits SCELC from paying unissued or erroneously 

issued lottery tickets, was inapplicable to his claim. Cox avers that because there 

6 S.C. Code Ann. §§ 15-78-10 to -220 (2005 & Supp. 2022). 

7 S.C. Code Ann. § 59-150-230(C)(3)(a) ("A prize must not be paid if it . . . arises 

from claimed lottery game tickets that are . . . unissued, [or] produced or issued in 

error . . . ."). 
 

 

 

 

 

 

 

 

 

 

 

was no alleged error, there was no need for him to file a complaint with SCELC or 

appeal to the SCELC board or the ALC. In addition, Cox contended SCELC's 

administrative remedy argument was moot because he initiated an administrative 

review that was denied by SCELC. Second, Cox argued sovereign immunity did 

not bar his equitable claims against SCELC. He asserted SCELC was not acting 

in, or serving a discretionary function by running the lottery. Cox maintained 

running the lottery was a commercial venture not protected by sovereign immunity 

under the TCA. Finally, Cox conceded his claims under SCUTPA should be 

dismissed. 

At the motion hearing,8 Respondents addressed the arguments raised in their 

motions to dismiss, while Cox addressed the arguments raised in his memorandum 

in opposition in addition to raising new arguments. Cox argued he was not 

required to exhaust his administrative remedies because the Act used permissive 

language when addressing the administrative procedures. In addition, Cox asserted 

the administrative process would be futile; however, his argument only addressed 

the related case. He generally stated, "[O]ut of an abundance of caution, we 

filed—for all of our clients, we submitted complaints to [SCELC]. . . . I believe, 

we have now received formal responses on all of those stating they reject or deny 

our claim for payment . . . ." He further argued SCELC was not entitled to claim 

sovereign immunity under the TCA because the lottery could not be considered "a 

quintessential government function." As to Intralot, Cox argued he was in privity 

with Intralot because lottery players were third-party beneficiaries of SCELC's 

contract with Intralot. He conceded his claim against Intralot for promissory 

estoppel should be dismissed because he could not identify an express promise 

made by Intralot. 

The circuit court granted Respondents' motions to dismiss on the ground Cox 

failed to exhaust his administrative remedies. In its order granting SCELC's 

motion to dismiss, the circuit court determined that under the Act and SCELC 

regulations, any person aggrieved by an action or decision of SCELC must first file 

a written complaint with the SCELC executive director. If the aggrieved person is 

dissatisfied with the executive director's decision, they could then appeal the 

decision to the SCELC board and then to the ALC. The circuit court 

acknowledged the Act permitted, but did not mandate, an exclusive administrative 

remedy; however, the court noted our supreme court has required exhaustion when 

8 The circuit court held a joint hearing to consider Respondents' motions to dismiss 

in this case and a related case. The hearing primarily concerned the parties' 

arguments in the related case. 
 

 

 

 

 

 

 

 

there is an adequate administrative remedy even though the statute did not 

expressly require it. Further, the circuit court determined Cox failed to allege the 

exhaustion of the entire administrative process would be futile. Finally, the circuit 

court found the requirement to exhaust the entire administrative review process 

applied to putative classes of claimants. Because Cox failed to allege he followed 

the procedures for administrative review or that doing so would be futile, the 

circuit court dismissed Cox's complaint for failure to exhaust his administrative 

remedies. In its order granting Intralot's motion to dismiss, the circuit court 

restated its findings on whether Cox was required to exhaust his administrative 

remedies. Cox did not file a Rule 59(e), SCRCP motion to reconsider. This appeal 

followed. 

ISSUE ON APPEAL 

Did the circuit court err in granting Respondents' motions to dismiss? 

STADARD OF REVIEW 

"Whether administrative remedies must be exhausted is a matter within the [circuit 

court]'s sound discretion and [its] decision will not be disturbed on appeal absent 

an abuse thereof." Hyde v. S.C. Dep't of Mental Health, 314 S.C. 207, 208, 442 

S.E.2d 582, 582-83 (1994). "An abuse of discretion occurs where the [circuit 

court] was controlled by an error of law or where [the circuit court's] order is based 

on factual conclusions that are without evidentiary support." Stanton v. Town of 

Pawleys Island, 309 S.C. 126, 128, 420 S.E.2d 502, 503 (1992) (quoting Coleman 

v. Dunlap, 306 S.C. 491, 495, 413 S.E.2d 15, 17 (1992)). 

LAW AND ANALYSIS 

Cox first argues his claims for breach of contract, unjust enrichment, promissory 

estoppel, and negligence were not subject to the requirement of exhaustion of 

administrative remedies. Specifically, he asserts there is no administrative 

exhaustion requirement for tort claims brought against a third-party and therefore, 

the requirement did not apply to his claims against Intralot. Further, Cox contends 

his claims were not based on a statutory violation that mandated the pursuit of an 

administrative remedy. Lastly, Cox asserts the SCELC board had not notified him 

of a decision prior to the filing of the amended complaint and therefore, the 

administrative procedure did not apply to him. 
 

 

 

 

 

 

 

 

 

 

 

We find these exhaustion arguments are not preserved for appellate review. See 

Wilder Corp. v. Wilke, 330 S.C. 71, 76, 497 S.E.2d 731, 733 (1998) ("It is 

axiomatic that an issue cannot be raised for the first time on appeal, but must have 

been raised to and ruled upon by the [circuit court] to be preserved for appellate 

review."); see also I'On, L.L.C. v. Town of Mt. Pleasant, 338 S.C. 406, 422, 526 

S.E.2d 716, 724 (2000) ("[T]he losing party generally must both present his issues 

and arguments to the lower court and obtain a ruling before an appellate court will 

review those issues and arguments."). Cox did not raise these arguments in his 

memorandum in opposition to SCELC's motion to dismiss or at the motion hearing 

and he failed to file a Rule 59(e) motion to alter or amend. See Doe v. Doe, 370 

S.C. 206, 212, 634 S.E.2d 51, 55 (Ct. App. 2006) ("[W]hen an appellant neither 

raises an issue at trial nor through a Rule 59(e), SCRCP, motion, the issue is not 

preserved for appellate review."); Ness v. Eckerd Corp., 350 S.C. 399, 403-04, 566 

S.E.2d 193, 196 (Ct. App. 2002) ("If a [circuit court] grants 'relief not previously 

contemplated or presented to the [circuit] court, the aggrieved party must move, 

pursuant to Rule 59(e), SCRCP, to alter or amend the judgment in order to 

preserve the issue for appeal.'" (quoting In re Est. of Timmerman, 331 S.C. 455, 

460, 502 S.E.2d 920, 923 (Ct. App. 1998))); see also I'On, L.L.C., 338 S.C. at 422, 

526 S.E.2d at 724 (holding that imposing preservation requirements on an 

appellant "prevents a party from keeping an ace card up his sleeve—intentionally 

or by chance—in the hope that an appellate court will accept that ace card and, via 

a reversal, give him another opportunity to prove his case"). Accordingly, we find 

these arguments are unpreserved. 

Next, Cox argues the Act's grievance procedure was inapplicable to his claims 

because he did not allege his lottery tickets were erroneously issued. Cox contends 

the prohibition under section 59-150-230(C)(3)(a) preventing SCELC from paying 

winnings on tickets unissued or erroneously issued was inapplicable, or in the 

alternative, presented a question of fact. We disagree. 

"[T]he doctrine of exhaustion of administrative remedies is generally considered a 

rule of policy, convenience and discretion, rather than one of law, and is not 

jurisdictional." Storm M.H. ex rel. McSwain v. Charleston Cnty. Bd. of Trs, 400 

S.C. 478, 487, 735 S.E.2d 492, 497 (2012) (quoting Ward v. State, 343 S.C. 14, 17 

n.5, 538 S.E.2d 245, 246 n.5 (2000)). "[T]he failure to exhaust administrative 

remedies goes to the prematurity of a case, not subject matter jurisdiction." Id. 

(quoting Ward, 343 S.C. at 17 n.5, 538 S.E.2d at 246 n.5). 

Exhaustion is generally required as a matter of 

preventing premature interference with agency processes, 
 

 

 

 

 

 

 

 

so that the agency may function efficiently and so that it 

may have an opportunity to correct its own errors, to 

afford the parties and the courts the benefit of its 

experience and expertise, and to compile a record which 

is adequate for judicial review. 

Video Gaming Consultants, Inc. v. S.C. Dep't of Revenue, 342 S.C. 34, 38, 535 

S.E.2d 642, 644 (2000). "Where an adequate administrative remedy is available to 

determine a question of fact, one must pursue the administrative remedy or be 

precluded from seeking relief in the courts." Hyde, 314 S.C. at 208, 442 S.E.2d at 

583. "[The circuit court] must have a sound basis for excusing the failure to 

exhaust administrative relief." Id. at 209, 442 S.E.2d at 583. 

We hold the circuit court did not abuse its discretion in finding Cox was required 

to exhaust his administrative remedies under the Act and SCELC regulations. 

Initially, Cox did not argue to the circuit court that the administrative process 

under the Act and SCELC regulations was not applicable to claims concerning the 

determination of whether a prize should be paid on a lottery ticket. Thus, we find 

this argument is not preserved. See Wilder Corp., 330 S.C. at 76, 497 S.E.2d at 

733 ("It is axiomatic that an issue cannot be raised for the first time on appeal, but 

must have been raised to and ruled upon by the [circuit court] to be preserved for 

appellate review."). Instead, Cox argued the administrative process was only 

applicable to tickets that were alleged to have been produced or issued in error. 

We conclude Cox's argument misconstrues the Act. 

The Act and SCELC regulations provide an administrative remedy to determine 

whether a prize should be paid on a lottery ticket. See Hyde, 314 S.C. at 208, 442 

S.E.2d at 583 ("Where an adequate administrative remedy is available to determine 

a question of fact, one must pursue the administrative remedy or be precluded from 

seeking relief in the courts."). Section 59-150-230(C) provides, "[SCELC] 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." Regulations 44-70(E)-(F) (2011) of the South 

Carolina Code of Regulations state the SCELC executive director may deny 

awarding a prize to a claimant if the ticket was issued or produced in error and the 

executive director's decision is subject to an appeal to SCELC. Section 

59-150-300(A) provides that any "lottery game ticket holder aggrieved by an 

action of the [SCELC] board may appeal that decision to the [ALC]." A final 

decision of the ALC involving SCELC must be appealed to the circuit court. See 

S.C. Code Ann. § 59-150-300(D). Although section 59-150-230(C)(3)(a) 
 

provides, "A prize must not be paid if it . . . arises from claimed lottery game 

tickets that are . . . unissued, [or] produced or issued in error," we find the 

administrative procedure was applicable to all claims concerning the payment of a 

prize on a lottery ticket regardless of whether the claimant alleged there was an 

error. The determination of whether the ticket was issued or printed in error was a 

factual determination to be made by SCELC through the administrative process. 

Furthermore, we reject Cox's assertion that the circuit court accepted Respondents' 

claim the lottery tickets were printed in error in determining Cox was required to 

exhaust his administrative remedies. Accordingly, we hold the circuit court did not 

abuse its discretion in finding Cox was required to exhaust his administrative 

remedies under the Act and SCELC regulations. See Kiawah Dev. Partners, II v. 

S.C. Dep't of Health & Env't Control, 411 S.C. 16, 32, 766 S.E.2d 707, 717 (2014) 

(holding if "the language of a statute or regulation directly speaks to the issue. . . . 

the court must utilize the clear meaning of the statute or regulation"). 

Cox further argues an administrative review of his claims would be futile because 

SCELC refused to offer any relief to him and the SCELC board's decision "was 

certain to be unfavorable." Similarly, Cox argues Respondents' administrative 

remedy argument is moot because SCELC denied his claims for payment and was 

a matter of statutory construction.9 

 We disagree. 

"South Carolina, like most jurisdictions, recognizes exceptions to the exhaustion of 

administrative remedies requirement. The general rule is that administrative 

remedies must be exhausted absent circumstances supporting an exception to 

application of the general rule." Brown v. James, 389 S.C. 41, 54, 697 S.E.2d 604, 

611 (Ct. App. 2010). "Futility, however, must be demonstrated by a showing 

comparable to the administrative agency taking 'a hard and fast position that makes 

an adverse ruling a certainty.'" Id. (quoting Law v. S.C. Dep't of Corr., 368 S.C. 

424, 438, 629 S.E.2d 642, 650 (2006)); see also Stanton, 309 S.C. at 128, 420 

S.E.2d at 503 (holding the party seeking to avoid the exhaustion requirement has 

the burden of showing "that as a matter of law, he was not required to exhaust 

administrative remedies or that the [circuit court]'s ruling was based upon facts for 

which there is no evidentiary support"). 

9 Cox does not explain what aspect of Respondents' administrative remedy 

argument raises a question of statutory construction. We construe his argument to 

refer to the issue of whether the Act's grievance procedure was inapplicable to his 

claims because he did not allege his lottery tickets were erroneously issued. 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

We hold the circuit court did not abuse its discretion in finding Cox's failure to 

exhaust his administrative remedies was not excused by the futility exception. Cox 

failed to provide any evidence showing SCELC had made any decision on his 

claim, much less a "hard and fast decision." The record does not contain evidence 

of any decision made by SCELC and it is unclear from the hearing transcript 

whether Cox's assertion at the motion hearing regarding SCELC's formal response 

denying a claim pertained to this case. Thus, Cox failed to satisfy his burden to 

show the futility exception applied. Accordingly, we hold the circuit court did not 

abuse its discretion in finding Cox's failure to exhaust his administrative remedies 

was not excused by the futility exception. 

As to Cox's mootness argument regarding statutory construction, we find this issue 

is not preserved for appellate review because it was not raised to or ruled upon by 

the circuit court. See Wilder Corp., 330 S.C. at 76, 497 S.E.2d at 733 ("It is 

axiomatic that an issue cannot be raised for the first time on appeal, but must have 

been raised to and ruled upon by the [circuit court] to be preserved for appellate 

review."); see also I'On, L.L.C., 338 S.C. at 422, 526 S.E.2d at 724 ("[T]he losing 

party generally must both present his issues and arguments to the lower court and 

obtain a ruling before an appellate court will review those issues and arguments."). 

Lastly, Cox argues he should be excused from exhausting his administrative 

remedies because class actions are not permitted in the ALC. We find this issue is 

not preserved for appellate review. See Wilder Corp., 330 S.C. at 76, 497 S.E.2d at 

733 ("It is axiomatic that an issue cannot be raised for the first time on appeal, but 

must have been raised to and ruled upon by the [circuit court] to be preserved for 

appellate review."); see also I'On, L.L.C., 338 S.C. at 422, 526 S.E.2d at 724 

("[T]he losing party generally must both present his issues and arguments to the 

lower court and obtain a ruling before an appellate court will review those issues 

and arguments."). Although the circuit court found in its orders of dismissal that 

the requirement to exhaust the entire administrative review process applied to 

putative classes of claimants, Cox did not raise this argument in his memorandum 

in opposition to SCELC's motion to dismiss or at the motion hearing and he failed 

to file a Rule 59(e) motion to alter or amend. See Doe, 370 S.C. at 212, 634 S.E.2d 

at 55 ("[W]hen an appellant neither raises an issue at trial nor through a Rule 59(e), 

SCRCP, motion, the issue is not preserved for appellate review."); Ness, 350 S.C. 

at 403-04, 566 S.E.2d at 196 ("If a [circuit court] grants 'relief not previously 

contemplated or presented to the [circuit] court, the aggrieved party must move, 

pursuant to Rule 59(e), SCRCP, to alter or amend the judgment in order to 

preserve the issue for appeal.'" (quoting In re Est. of Timmerman, 331 S.C. at 460, 

502 S.E.2d at 923)); see also I'On, L.L.C., 338 S.C. at 422, 526 S.E.2d at 724 
 

 

 

(holding that imposing preservation requirements on an appellant "prevents a party 

from keeping an ace card up his sleeve—intentionally or by chance—in the hope 

that an appellate court will accept that ace card and, via a reversal, give him 

another opportunity to prove his case"). Accordingly, we find this argument is 

unpreserved. 

CONCLUSION 

Based on the foregoing, the circuit court's orders granting SCELC's and Intralot's 

motions to dismiss are 

AFFIRMED. 

HEWITT, J., and LOCKEMY, A.J., concur.