Lottery Bonds

What is a Lottery Bond?

In most states, individuals who sell lottery tickets and/or use lottery equipment for commercial purposes must post a surety bond. This type of surety bond is used to protect the state in the event that a lottery seller mishandles lottery funds or tampers with lottery equipment. At the same time, lottery bonds protect consumers by ensuring the lottery seller adheres to industry regulations, which ultimately keeps the lottery a safe and fair activity for everyone.

So how do lottery bonds work, anyway? Every bond insurance contract that’s issued functions as a legally binding contract that brings three parties together:

  • The obligee is the government agency requiring an individual or business to be bonded.
  • The principal is the individual or business that gets bonded to guarantee some sort of performance.
  • The surety is the insurance company that underwrites the bond, thereby backing the principal’s ability to meet the bond’s terms.

Although specific consequences vary by state, it remains constant that a claim can be filed on the bond if the lottery seller misappropriates any money going to the lottery or tampers with lottery machinery. If the claim is validated, the surety will be responsible for paying reparation up to the full face value of the bond. The surety will then require the principal to repay it for any claims paid.

To get started, download the application below and send it back to Bond Brokers (via fax or email) :

License/Permit/Misc Bond Application