How to Get a Maryland Lottery Agency Bond

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Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your Maryland Lottery Agency Bond needs.

How Do I Get a Lottery Retailer Agents License?

In Maryland, the Maryland State Lottery and Gaming Control Agency (the “Agency” for short) licenses retail lottery agents.

What Does the Licensing Process Involve?

Applying for a license as a Maryland lottery agent involves filling out an application that identifies all partners and stockholders in the business and disclosing any criminal offenses, past or pending.

The application also requires information about the business location, including hours of operation and average weekly traffic. 

If you don’t show sufficient financial strength and stability or if the Agency has any concern, they can require you to purchase a Maryland lottery agent surety bond.

Why Is a Lottery Bond Required?

The bonding requirement serves two purposes. First, it is the lottery agent’s guarantee to comply with all the Agency’s regulations. Some things a lottery bond requires of an agent include:

  • Exercising fiduciary responsibilities as custodian of lottery tickets, proceeds of lottery sales, etc.
  • Forwarding proceeds of lottery sales to the Lottery’s account
  • Maintaining accurate records
  • Providing required claim services and making cash payouts for an amount less than $600
  • Not selling to underage customers

Second, a lottery bond legally obligates the agent to compensate those with valid claims against the bond because of the agent’s noncompliance.

How Does a Lottery Bond Work?

The Agency is referred to as the “obligee” requiring the lottery bond, and the lottery agent is called the “principal.” There is a third party to the legally binding surety bond agreement, and that is the bond’s guarantor, known as the “surety.” 

The surety bond agreement legally obligates the principal to pay all claims that the surety determines are valid. However, the surety–having guaranteed the payment of claims by the principal–usually takes the initiative and pays a claim up front on the principal’s behalf. The principal still bears full payment responsibility but is now obligated to repay the surety rather than write a check to the claimant. The surety can take legal action to recover the claim amount from the principal.

What Does a Lottery Bond Cost? 

When a Maryland lottery bond is required, the Agency establishes the bond amount, and will vary depending on the amount of financial protection desired in the event the principal fails to remit lottery sales proceeds to the Agency. The premium rate, however, is set by the surety to reflect the risk of not being repaid for claims paid on behalf of the principal. 

The assessment of that risk is based in large part on the principal’s personal credit score. A creditworthy principal presents a low risk to the surety, so the premium rate should also be low. A principal who is less creditworthy is a higher risk and will be assigned a higher premium rate. The average premium rate for a Maryland lottery bond is between one and two percent, with lesser credit principals potentially paying higher than this.

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Our surety bond professionals will get you the Maryland lottery agency bonds you need at a competitive rate.