Lottery Bonds

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Learn everything you need to know more about lottery bonds, and request a quote today. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts.

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What Are Lottery Bonds?

States that conduct state-sponsored lotteries have implemented various methods to ensure that lottery retailers comply with all of the statutes and regulations governing lottery operations. In this context, “lottery retailer” includes any individual or business that operates lottery equipment and/or sells lottery tickets.

In purchasing a lottery bond, a lottery retailer is pledging to conduct business in a completely honest and aboveboard manner. The bond is also the lottery retailer’s guarantee to compensate the state for any financial loss resulting from the retailer’s unlawful or unethical actions, such as misappropriating lottery funds or tampering with lottery equipment.

Who Needs Them?

Anyone engaging in the retail sale of state lottery tickets must first purchase a lottery surety bond. The required bond amount differs by state but is commonly in the range of $5,000 to $20,000.

How Do They Work?

Purchasing a lottery bond is a mandatory step in becoming licensed as a lottery agent. The surety bond agreement is a legally binding contract among three parties with distinctly different roles and responsiiblities:

  • The state agency with jurisdiction over a state’s lottery and mandating the purchase of a lottery bond is referred to as the “obligee.”
  • The lottery retailer required to purchase the bond is known as the bond’s “principal.”
  • The surety company underwriting and issuing the bond is called the “surety.”

If the principal commits an infraction of the rules set forth in the surety bond agreement—for example, failing to remit lottery sales proceeds to the state—the obligee can file a claim against the bond. If the surety finds that the claim is valid but is unable to negotiate an amicable settlement, the surety typically pays the claim on behalf of the principal, who is then legally obligated to reimburse the surety.

This process is made possible by the fact that in issuing a lottery surety bond, the surety estabishes a line of credit for the principal in the required amount of the lottery bond. This line of credit will provide the funds to pay claims, if necessary. That’s why the main factor the surety considers in setting the surety bond premium rate is the principal’s personal credit score. A principal with a high credit score has a track record of paying creditors on time, which minimizes the risk the surety assumes in issuing a surety bond to that individual.

What Do They Cost?

A principal with a credit score of 650 or above should qualify for the standard market premium rate of 1% to 3% of the required bond amount. Those with poor credit may pay a higher premium rate because of the greater risk to the surety.

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Learn everything you need to know more about lottery bonds, and request a quote today. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts.

CONTACT US FOR A

FREE LOTTERY BOND QUOTE

What Are Lottery Bonds?

States that conduct state-sponsored lotteries have implemented various methods to ensure that lottery retailers comply with all of the statutes and regulations governing lottery operations. In this context, “lottery retailer” includes any individual or business that operates lottery equipment and/or sells lottery tickets.

In purchasing a lottery bond, a lottery retailer is pledging to conduct business in a completely honest and aboveboard manner. The bond is also the lottery retailer’s guarantee to compensate the state for any financial loss resulting from the retailer’s unlawful or unethical actions, such as misappropriating lottery funds or tampering with lottery equipment.

Anyone engaging in the retail sale of state lottery tickets must first purchase a lottery surety bond. The required bond amount differs by state but is commonly in the range of $5,000 to $20,000.

Purchasing a lottery bond is a mandatory step in becoming licensed as a lottery agent. The surety bond agreement is a legally binding contract among three parties with distinctly different roles and responsiiblities:

  • The state agency with jurisdiction over a state’s lottery and mandating the purchase of a lottery bond is referred to as the “obligee.”
  • The lottery retailer required to purchase the bond is known as the bond’s “principal.”
  • The surety company underwriting and issuing the bond is called the “surety.”

If the principal commits an infraction of the rules set forth in the surety bond agreement—for example, failing to remit lottery sales proceeds to the state—the obligee can file a claim against the bond. If the surety finds that the claim is valid but is unable to negotiate an amicable settlement, the surety typically pays the claim on behalf of the principal, who is then legally obligated to reimburse the surety.

This process is made possible by the fact that in issuing a lottery surety bond, the surety estabishes a line of credit for the principal in the required amount of the lottery bond. This line of credit will provide the funds to pay claims, if necessary. That’s why the main factor the surety considers in setting the surety bond premium rate is the principal’s personal credit score. A principal with a high credit score has a track record of paying creditors on time, which minimizes the risk the surety assumes in issuing a surety bond to that individual.

A principal with a credit score of 650 or above should qualify for the standard market premium rate of 1% to 3% of the required bond amount. Those with poor credit may pay a higher premium rate because of the greater risk to the surety.

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Request a quote online or call today to speak with one of our surety bond agents about the lottery bond requirements in your state.