On July 27, 2002, at 0645 mountain daylight time, N2867W, an Aerostar International Balloon S-77A, experienced a hard landing in Custer, South Dakota. The pilot was not injured. One passenger was seriously injured, one passenger received a minor injury, and six passengers were not injured. The balloon was not damaged. The Title 14 CFR Part 91 business flight was operating in visual meteorological conditions without a flight plan. The flight originated in Custer, South Dakota, at 0600. According to the pilot's written statement, after takeoff the balloon encountered increased winds at an altitude of approximately 200 feet. The pilot reported that as they came out of a valley the winds picked up. He stated that he then dropped down to land on the open prairie and briefed the passengers for a landing on a sloped ridge. He reported that he told the passengers to "...bend their knees and hold on to the basket." The pilot stated, "Contacted the ground on slope of hill with fairly steep incline. Pulled top out of balloon for fast deflation." According to the pilot, the balloon slid approximately 60 feet to the top of the incline and as it passed over the top of the incline the basket swung up and forward for about 30 to 40 feet. He stated that the basket then contacted the ground and slid to a rest within 50 to 60 feet. During a telephone interview, the pilot reported that another pilot in a balloon behind him used a GPS to check the winds while airborne. This pilot reported the winds were 27 miles per hour. According to an inspector with the Federal Aviation Administration, he was attending a balloon rally in Custer at the time of the accident. He reported that he witnessed several balloons depart without incident at the same time as N2867W. According to the inspector approximately 10 minutes after their departure the wind velocity increased and direction varied. This lasted for about 10 minutes then the winds calmed down.