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Lottery Bonds

If you intended to sell lottery tickets or lottery-sanctioned products in your place of business, you probably need to obtain a lottery bond first. States make these surety bonds mandatory as a way to regulate lottery sales and penalize those who don't follow the rules. Before you apply for the lottery surety bond your business requires, learn how they work and why they're important.

What is a Lottery Bond?

Lottery bonds hold a business owner responsible when he or she violates state lottery rules, particularly the rules requiring a business to remit lottery proceeds to the proper authorities. When that happens, the state may file a claim against the surety bond seeking damages equal to the harm caused by the guilty business. Bonds guarantee payment for all valid claims, and they hold businesses that violate the lottery rules financially responsible even if that party attempts to avoid payment. By requiring surety bonds, states put a mechanism in place to penalize businesses that violate lottery rules and, therefore, discourage this kind of behavior from happening.

How does a Lottery Bond work?

Lottery bonds provide a guarantee that the bonded business will remit the proceeds due the state government for the sale of lottery tickets in a timely manner. In cases where a business has a past due amount due the state for the sale of lottery tickets, a claim on the surety bond can be made to recover the unpaid amount. The Surety, the party providing the guarantee behind the surety bond, would have to pay the claim amount to cover their responsibility to the bond. The Surety would then attempt to collect the amount paid on the claim from the bond principal, the business selling the lottery tickets. The business is ultimately responsible for any amount paid on a claim by the Surety.

Who should get a Lottery Bond?

In general, anyone planning to sell lottery tickets needs one of these surety bonds. If you're unsure whether this requirement applies to your business, contact Viking Bond Service. We encourage anyone who does need a surety bond to obtain one sooner rather than later because it's illegal to sell lottery tickets without one.

Who are the parties involved in a Lottery Bond?

Lottery bonds are a form of surety bond, and all surety bond agreements involve three parties:

  • Principal - The business required to get the surety bond and required to pay for claims against the bond.
  • Obligee - The state agency that regulates the lottery. The obligee has the right to file claims against the surety bond when a principal disregards state lottery rules.
  • Surety - The company that issues the lottery bond to the principal. If the surety settles a claim on the principal's behalf, the principal must pay that amount back with interest and fees included.

What is the cost of a Lottery Bond?

Lottery bond penalty amounts vary state to state. The typical surety bond amount required ranges from $5,000 to $20,000. Some states do have lottery bond requirements outside of this range though. In any state, the cost of a lottery bond (called the premium) amounts to a small percentage of the bond total. The surety bond applicant's credit score and financial history determine exactly how much, and while applicant's with bad credit will pay more, they most likely won't be denied with the help of Viking Bond Service.

How are claims handled for Lottery Bonds?

The surety does not assume every claim is valid, even when the source is a government agency. Instead, the surety investigates every claim until it can prove the details are true/false. If a claim has merit and the principal continues to refuse to pay, the surety settles the claim in full. At that point, the principal's debt transfers from the obligee to the surety. The claims process only ends once the principal reimburses the surety the amount of the claim plus interest and investigative costs.

How to apply for a Lottery Bond?

It only involves a few steps, and you can expect to get a quote back within 24 hours. Start by filling out an online surety bond application. It will ask you for information about your business, your financial history, and about any partners you have. You may also have to provide a financial statement or other documentation the surety needs to evaluate your application.

Viking Bond Service - Request a Lottery Bond Quote:

If lottery sales are important to your business, so is having the right surety bond and the right bond partner. Find both in Viking Bond Service, a national surety bond company with the resources necessary to make things quick, easy, and affordable for everyone we serve. Learn more about lottery surety bonds by calling our team at 1-888-278-7389 or by sending a note through the contact form on this page. Or complete a bond application whenever it's convenient.

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