Virginia Lottery Retailer Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a Virginia 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 lottery retailers operating in Virginia
- Purpose: To ensure the public will receive compensation if the retailer fails to remit all funds owed to the lottery department
- Who Regulates Video Lottery Retailers in Virginia: The Virginia State Lottery Department
Background
Virginia statute 58.1-4009 requires all lottery retailers operating in the state to obtain a license with the SLD. The Virginia 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 must purchase and maintain a surety bond to be eligible for licensure.
What is the Purpose of the Virginia Lottery Retailer Bond?
Virginia requires lottery retailers to purchase a surety bond as part of the application process to obtain a business 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 Virginia statutes 58:1-40. Specifically, the bond protects the public in the event the retailer fails to remit all funds owed to the SLD. 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 Virginia Lottery Retailer Bond?
BondExchange makes obtaining a Virginia 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?
The SLD uses a sliding scale based on the retailer’s estimated ticket sales to determine the required bond amount. The SLD will inform the retail of their bond amount after reviewing the retailer’s license application.
Is a Credit Check Required for the Virginia Lottery Retailer Bond?
Surety companies will run a credit check on the owners of the retail company to determine eligibility and pricing for the Virginia 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 Virginia Lottery Retailer Bond Cost?
The Virginia 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 $20,000 bond requirement.
$20,000 Lottery Bond Cost
| Credit Score | Bond Cost (1 year) | Bond Cost (1 month) |
|---|---|---|
| 800+ | $300 | $30 |
| 650 – 799 | $400 | $40 |
| 600 – 649 | $1,000 | $100 |
*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?
Virginia statute 58.1-4009 requires all applicants for a retail lottery license to purchase a surety bond, regardless of the applicant’s creditworthiness and financial responsibility.
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 Lottery Retailers Apply for a License in Virginia?
Lottery retailers in Virginia must navigate several steps to secure their licenses. Below are the general guidelines, but applicants should refer to the application form for details on the process.
License Period – All Virginia Retailer Lottery Licenses are valid for one year from the date of issuance and must be renewed before the expiration date
Step 1 – Complete the Application
All Virginia Lottery Retailer license applications can be completed electronically here. Retailers must pay a $100 application and undergo a background and credit check during the application process.
Step 2 – Purchase a Surety Bond
After the retailer submits their application, the SLD will determine the retailer’s required bond amount. When making their determination, the lottery department will consider the retailer’s projected sales volume.
How Do Virginia Lottery Retailers Renew Their License?
The SLD will send the retailer renewal prior to their license expiration date. All Virginia Retailer Lottery Licenses are valid for one year from the date of issuance and must be renewed before the expiration date.
What Are the Insurance Requirements for Virginia Lottery Retailers?
Virginia does not require lottery retailers to obtain any form of liability insurance as a prerequisite to obtaining a retailer license. Retailers must purchase and maintain a surety bond in an amount set by the SLD.
How Do Virginia Lottery Retailers File Their Bond?
Retailers should either mail or drop off their completed bond form, including the power of attorney, to any of the SLD’s customer service offices. The address to the SLD’s Richmond office is:
Virginia Lottery Licensing Department
600 East Main Street
Richmond, Virginia 23219
The Virginia 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 and state of incorporation
- Bond amount
- Date the bond goes into effect
- Date the bond is signed
What Can Virginia Lottery Retailers Do to Avoid Claims Against Their Bond?
To avoid claims against their bond, lottery retailers in Virginia must ensure that they remit all funds owed to the SLD.
What Other Insurance Products Can Agents Offer Lottery Retailers in Virginia?
Virginia 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 Virginia Lottery Retailer Customers?
Virginia conveniently provides a public list to search for active lottery retailers in the state. The list can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.
