Businesses in certain states that sell lottery tickets to customers may be required to obtain a Lottery Bond as a condition of their state requirements. A Lottery Bond protects both the state and lottery winners from any potential mishandling of lottery winnings, including the processes and machinery used to dispense lottery tickets on location with the seller.
Each state that has a lottery division, corporation, or organization has laws that define the sales of lottery tickets, retailer responsibilities, sweeping of the retailer accounts, payout of major winning tickets, processing of proceeds for scholarships, older residence assistance, or other purposes the state has designated for the collected funds.
Businesses such as convenience stores at gas stations, liquor stores, grocery stores, and truck plazas can apply to become a lottery retailer. Some states restrict where the lottery sales can occur so check with your state to ensure that the business establishment meets the requirements.
Retailers benefit from lottery sales in numerous ways including increased traffic to their store, commission from the sales of the tickets sold, marketing assistance, lottery equipment, and commission on prize selling tickets.
Retailers must apply, register, or be licensed to sell lottery products. Most states require a retailer to complete an application, sign a contract, and set up a checking account that includes a joint account with the state as an account holder. The purpose of the checking account is so that the state can “sweep” the account to collect funds from lottery sales. Many states will also require retailers to provide a credit report and fingerprints for a background check and may disqualify a retailer from participating if there certain negative remarks.
In addition to the contract and application process, a state may have a surety bond or other financial requirement. Each state varies as to whether or not there is a bond requirement, the length of time the retailer must have a bond, or if the bond is a penalty to the retailer.
Retailers that do not keep sufficient funds in the joint bank account and are short of what is due to the state during a sweep of the account may be forced to obtain a bond. Additionally, states may require financial statements from the retailer to ensure that adequate assets are available and that the business is in a good financial status.
States that have a surety bond requirement includes:
Connecticut Lottery Retailer- the Connecticut Lottery Commission (CLC) may require the retailer to obtain a bond in an amount that is determined by the CLC.
Florida Lottery Retailer- obtain a bond in the amount determined by the Florida Department of Lottery.
Georgia Lottery Retailer- obtain a bond in the amount determined by the Georgia Lottery Corporation.
Minnesota Lottery Applicants- retailers who do not maintain a good payment history of lottery sales will need to deposit at least $3,000 or two weeks of ticket sales based on their 26 week average, whichever is more and maintain that amount for at least 6 months. The deposit can be in the form of a surety bond.
Nebraska Lottery Retailer- If a bond is required the Nebraska Lottery Division will determine the bond amount.
North Carolina Lottery Agent- the North Carolina Education Lottery will determine if a bond is required and the bond amount.
North Dakota Lottery Retailer- the North Dakota Lottery Division requires the retailer to provide proof of financial stability and if the financial stability is inefficient, the Division will determine the bond amount that will be required.
Ohio Lottery Retailer- a minimum $15,000 bond is required, but a higher bond amount may be required based on the lottery sales.
Pennsylvania Lottery Retailer Agent- the Pennsylvania Bureau of State Lotteries may require a bond if they find the financial stability of the agent is insufficient. The Bureau will determine the bond amount required.
South Dakota Video Lottery Licensee- the South Dakota Lottery requires a uniform surety bond and will determine the bond amount required.
Virginia Lottery Retailer- The Virginia Lottery Board will determine the bond amount that will be required. The bond amount is based on the average volume of lottery ticket sales.
Many of the states that have a bond requirement will instead accept another form of security in the amount equal to the bond. This may be a cash deposit or irrevocable letter of credit, or other security.
Premium for a Lottery Retailer Bond is dependent on credit and the required bond amount.
SuretyGroup.com is here to help you with your bonding needs. Contact our Surety Bond Specialists to get started:
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We have been underwriting surety bonds for over 35 years, and we offer bonds for individuals and businesses of every size.
Our team of experienced surety specialists and in-house underwriting authority gives us a unique advantage over other surety companies. We are able to offer competitive, low rates, quick approvals and immediate bond delivery. In most cases we can approve your application today and deliver your bond tomorrow.
For more information, read our Blog on Lottery Retailer Bonds.