Pennsylvania Lottery Retailer Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a Pennsylvania 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: All Pennsylvania lottery retailers who do not meet the required financial responsibility threshold
- Purpose: To ensure the public will receive compensation if the retailer fails to remit all funds owed to the department of revenue
- Who Regulates Lottery Retailers in Pennsylvania: The Pennsylvania Department of Revenue
Background
Pennsylvania Statute 805.1 requires all lottery retailers operating in the state to obtain a license with the DOR prior to selling tickets. The Pennsylvania legislature enacted the licensing laws and regulations to ensure that retailers engage in ethical business practices. To provide financial security for the enforcement of the licensing law, retailers who do not meet the DOR’s financial responsibility requirements must purchase and maintain a surety bond to be eligible for licensure.
What is the Purpose of the Pennsylvania Lottery Retailer Bond?
Pennsylvania requires retailers who do not meet the DOR’s financial responsibility requirements to purchase a surety bond as part of the application process to obtain a lottery license. The bond ensures that the public will receive compensation for financial harm if the retailer fails to comply with the regulations set forth in Pennsylvania statutes Chapter 805. Specifically, the bond protects the public in the event the retailer fails to remit all funds owed to the DOR. In short, the bond is a type of insurance that protects the public if the retailer violates licensing law.
How Can an Insurance Agent Obtain a Pennsylvania Lottery Retailer Bond?
BondExchange makes obtaining a Pennsylvania 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?
Pennsylvania statute 805.9 grants the DOR the authority to determine the bond amount on a case-by-case basis specific to each retailer. When determining the bond amount, the DOR will examine the retailer’s credit history and business financial statements and set the bond in an amount that ensures the DOR will not suffer financial harm if the retailer doesn’t pay any funds owed.
Is a Credit Check Required for the Pennsylvania Lottery Retailer Bond?
Surety companies will run a credit check on the owners of the retail company to determine eligibility and pricing for the Pennsylvania 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 Pennsylvania Lottery Retailer Bond Cost?
The Pennsylvania Lottery Retailer surety bond can cost anywhere between 1.5% to 5% 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 Bond Cost
| Credit Score | Bond Cost (1 year) | Bond Cost (1 year) |
|---|---|---|
| 800+ | $150 | $15 |
| 650 – 799 | $200 | $20 |
| 600 – 649 | $500 | $50 |
*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.
Who is Required to Purchase a Bond?
The DOR only requires retailers who do not meet the department’s financial responsibility standards to purchase a bond. The DOR will conduct a credit check on all retailers to determine whether or not they need to purchase a bond.
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 Pennsylvania?
Lottery retailers in Pennsylvania must navigate several steps when applying for a retail license. Below are the general guidelines, but applicants should refer to the licensing statutes for details on the process.
License Period – The Pennsylvania Lottery Retailer License is valid for one year from the date of issuance and must be renewed before the expiration date
Step 1 – Contact the Lottery
To become a lottery retailer, applicants must submit a contact request to the PA lottery and speak to a lottery sales agent. The sales agent will provide the retailer with an application, and walk the retailer through all the steps involved in the application process.
Step 2 – Submit the Application
The lottery office will provide the retailer with an application packet, which the retailer must complete in its entirety and return to the lottery office. Retailers must undergo a criminal background and credit check during the application process.
Step 3 – Pass Inspection
After the retailer has submitted their application, the lottery office will conduct an inspection of the retailer’s place of business to assess whether or not it complies with the Americans with Disabilities Act (ADA)
Step 4 – Purchase a Surety Bond
Retailers who do not meet the DOR’s financial responsibility requirements must purchase and maintain a surety bond in an amount set forth by the DOR
How Do Pennsylvania Retailers Renew Their License?
The lottery will send the retailer instructions on how to renew their license prior to its expiration date. The Pennsylvania Lottery Retailer License is valid for one year from the date of issuance and must be renewed before the expiration date.
What Are the Insurance Requirements for Pennsylvania Lottery Retailers?
Pennsylvania does not require retailers to obtain any form of liability insurance as a prerequisite to obtaining a lottery license. Retailers who do not meet the DOR’s financial responsibility requirements must purchase and maintain a surety bond in an amount set forth by the DOR.
How Do Pennsylvania Lottery Retailers File Their Bond?
Retailers should mail their completed bond form, including the power of attorney, to the following address:
Pennsylvania Department of Revenue
Bureau of State Lotteries
1200 Fulling Mill Road, Suite 1
Middletown, PA, 17057
The Pennsylvania 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 and address entity/individual(s) buying the bond
- Surety company’s name, address, and phone number
- Bond amount
- Date the bond is signed
What Can Pennsylvania Lottery Retailers Do to Avoid Claims Against Their Bond?
To avoid claims against their bond, lottery retailers in Pennsylvania must ensure that they remit all funds owed to the lottery commission.
What Other Insurance Products Can Agents Offer Lottery Retailers in Pennsylvania?
Pennsylvania does not require lottery retailers to obtain any form of liability insurance as a prerequisite to obtaining a retailer 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 Pennsylvania Lottery Retailer Customers?
Pennsylvania conveniently provides a public database to search for active lottery retailers in the state. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.
