DC Lottery Retailer Bond: A Comprehensive Guide

This guide provides information for insurance agents to help their customers obtain a DC Lottery Retailer Bond

At a Glance:

• Lowest Cost: 1.5% of the bond amount per year based on the applicant’s credit
• Bond Amount: Determined on a case by case basis (more on this later)
• Who Needs it: DC lottery retailers who do not meet the DC Office of Lottery and Gaming’s (OLG) financial responsibility requirements
• Purpose: To ensure the public will receive compensation if the retailer fails to remit all funds owed to the OLG
• Who Regulates Lottery Retailers in DC: The DC Office of Lottery and Gaming

Background

DC statute 36-601.15 grants the OLG the authority to require retailers to purchase a surety bond prior to receiving a lottery license. The DC legislature enacted the bonding requirement to ensure that the OLG receives all funds owed to them by retailers and that retailers pay all funds owed to winners. The bond amount is determined on a case-by-case basis and is set by the OLG.

What is the Purpose of the DC Lottery Retailer Bond?

DC requires certain lottery retailers to be bonded prior to obtaining a retailer license. The bond ensures that the OLG will receive all funds owed to them by retailers and that all prizes will be awarded to winners, even if the retailer doesn’t have the ability to pay. The DC Lottery Retailer bond does not protect the retailer who purchases it, but rather the OLG and lottery winners.

How Can an Insurance Agent Obtain a DC Lottery Retailer Bond?

BondExchange makes obtaining a DC Lottery Retailer surety bond easy. Simply log in to your account and use our keyword search to find the “lottery” bond in our database. Don’t have a login? Gain access now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone at (800) 438-1162, email, or chat from 7:30 AM to 7:00 PM EST to assist you.

At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.

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How is the Bond Amount Determined?

DC statute 36-601.15 grants the OLG the authority to determine the required bond amount for each individual retailer on a case by case basis. The OLG will examine the retailer’s application, and then set a bond amount based on the retailer’s business financial standing. The OLG will ensure that the bond’s limit covers all potential losses the public may suffer.

Is a Credit Check Required for the DC Lottery Retailer Bond?

Surety companies will run a credit check on the owners of the retail company to determine eligibility and pricing for the DC Lottery Retailer bond. Owners with excellent credit and work experience can expect to receive the best rates. Owners with poor credit will likely be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the owner’s credit.

How Much Does the DC Lottery Retailer Bond Cost?

The DC Lottery Retailer surety bond can cost anywhere between 1.5% to 20% of the bond amount per year. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on a $10,000 bond requirement.

$10,000 Lottery Retailer Bond Cost

Who is Required to Purchase a Bond?

The DC OLG will determine whether a retailer needs to purchase a bond after reviewing their license application. When examining a retailer’s application, the OLG will examine factors such as the applicant’s business financial statements, creditworthiness, and sales volume to determine whether or not they need a bond. If the retailer has weak financial statements and medium to low sales volumes, then the OLG may require them to purchase a bond in an amount large enough to ensure they do not suffer any losses if the retailer is unable to pay all funds owed.

BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.

How do Retailers Apply for a Lottery License in DC?

Lottery retailers in DC must navigate several steps to secure their licenses. Below are the general guidelines, but applicants should refer to the application packet for details on the process.

License Period – All DC Lottery Retailer Licenses are valid for two years and must be renewed before their expiration date

Step 1 – Meet the Prerequisites

DC will only issue lottery retailer licenses to applicants who satisfy all of the following criteria:

• • Operates a lawful establishment located in DC which operates under regular business hours and is open to the public
  • Sells products other than lottery tickets
  • Do not have any felony convictions within the last 5 years

Step 2 – Obtain a Business License

All applicants for the DC Lottery Retailer License must obtain a Basic Business License from the Department of Commerce and Regulatory Affairs

Step 3 – Complete the Application

All DC Lottery Retailer License applications must be emailed to [email protected]. Retailers must complete the application in its entirety, and submit the following items:

• • Certificate of Good Standing
  • Federal tax ID number
  • Certificate of Occupancy
  • Internal revenue tax notice
  • W-9 form (per owner)
  • Clean Hands Certificate
  • Government-issued identification (per owner)

Retailers must pay a $50 fee when submitting their license application.

Step 4 – Purchase a Surety Bond

After reviewing the retailer’s application and creditworthiness, the OLG will determine whether or not the applicant needs to purchase a surety bond. If the applicant is required to purchase a bond, they must buy one in an amount set by the OLG.

How Do DC Lottery Retailers Renew Their License?

Retailers can renew their license by emailing their completed renewal application to [email protected]. All DC Lottery Retailer Licenses are valid for two years and must be renewed before their expiration date.

What Are the Insurance Requirements for the DC Lottery Retailer License?

DC does not require retailers to obtain any form of liability insurance as a prerequisite to obtaining a lottery license. Retailers with poor credit and business financials may need to purchase a surety bond in an amount set by the OLG.

How Do DC Lottery Retailers File Their Bond?

Lottery retailers should email their completed bond form, including the power of attorney, to [email protected]. The DC Lottery Retailer surety bond requires signatures from both the surety company that issues the bond and a representative from the retail organization. The surety company should include the following information on the bond form:

• Legal name of entity/individual(s) buying the bond
• Surety company’s name
• Bond amount
• Type of License (Lottery Retailer)
• Date the bond is signed
• Witness signatures for the principal and surety company

What Can DC Lottery Retailers Do to Avoid Claims Against Their Bond?

To avoid claims against their bond, lottery retailers in DC must ensure that they follow all license regulations, including some of the most important issues below that tend to cause claims:

• Pay all funds owed to the OLG
• Pay all funds owed to winners
• Do not engage in any acts of fraud

What Other Insurance Products Can Agents Offer Lottery Retailers in DC?

DC does not require retailers to obtain any form of liability insurance as a prerequisite to obtaining a lottery license. However, most reputable businesses will seek to obtain this insurance anyway. Bonds are our only business at BondExchange, so we do not issue liability insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.

How Can Insurance Agents Prospect for DC Retailer Customers?

DC conveniently provides a public database to search for active lottery retailers in the district. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services