Arkansas Licensed Lottery Retailer Bond: A Comprehensive Guide

October 20, 2021

Arkansas Licensed Lottery Retailer Bond

This guide provides information for insurance agents to help their customers obtain an Arkansas Licensed Lottery Retailer Bond

At a Glance:

  • Average Cost: Between 1.5% to 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 Arkansas lottery vendors who do not qualify for the self-bonding program
  • Purpose: To ensure the public will receive compensation if the vendor fails to remit sales proceeds and unsold tickets to the Lottery Commission
  • Who Regulates Lottery Retailers In Arkansas: The Arkansas Lottery Commission

Background

Arkansas statute 23-115-603 requires all lottery ticket retailers to become bonded prior to obtaining a retailer license. The Arkansas legislature enacted the bonding requirement to ensure that retailers engage in ethical business practices. Arkansas allows qualified lottery retailers to participate in a self-bonding program. Retailers who do not qualify for this program must purchase and maintain a surety bond in an amount determined by the Lottery Commission.

What is the Purpose of the Arkansas Licensed Lottery Retailer Bond?

Arkansas requires retailers who do not qualify for the self-bonding program to purchase a surety bond as part of the application process to obtain a retailer license. The bond ensures that the public will receive compensation for financial harm if the retailer fails to comply with the licensing regulations set forth in the Arkansas Scholarship Lottery Act. Specifically, the bond protects the public in the event the retailer fails to remit sales proceeds and unsold tickets to the Lottery Commission. In short, the bond is a type of insurance that protects the public if the retailer commits fraud.

Arkansas Licensed Lottery Retailer Bond Form

How Can an Insurance Agent Obtain an Arkansas Licensed Lottery Retailer Bond?

BondExchange makes obtaining an Arkansas Licensed 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? Enroll 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.

How is the Bond Amount Determined?

Arkansas statute 23-115-603 grants the Lottery Commission to determine the bond amount on a case by case basis. When making their determination, the Lottery Commission will examine the retailer’s real or expected amount of tickets sold and their history of on-time payments made to the commission.

Is a Credit Check Required for the Arkansas Licensed Lottery Retailer Bond?

Surety companies will run a credit check on the owners of the retail company to determine eligibility and pricing for the Arkansas Licensed 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 Arkansas Licensed Lottery Retailer Bond Cost?

The Arkansas Licensed 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 Licensed Lottery Retailer Bond Cost

Credit Score Bond Cost (1 year)
800+ $150
650 – 699 $200
600 – 649 $500

Who is Required to Purchase a Bond?

The Arkansas Lottery Commission allows retailers who have a history of making on-time payments to the commission to participate in a self-bonding program which requires the retailer to pay a $50 annual fee per retail location. Retailers who do not qualify for this program must purchase and maintain a surety bond.

How do Retailers Apply for a Lottery License in Arkansas?

Lottery retailers in Arkansas must navigate several steps to secure their licenses. Below are the general guidelines, but applicants should refer to the ALS retailer page for details on the process.

License Period – All Arkansas Lottery Licenses expire annually and must be renewed before their expiration date

Step 1 – Contact the ASL

The first step towards obtaining a lottery license in Arkansas is to contact the Lottery Commission at (501) 978-3950. The commission will provide the applicant with instructions on how to complete the application process, and mail the applicant all required forms and documentation.

Step 2 – Complete the Application

After contacting the ASL and receiving the necessary forms, retailers must mail their completed application to the following address:

Office of the Arkansas Lottery
Post Office Box 3238
Little Rock, AR 72203-3238

Retailers must complete the application in its entirety, and submit the following items:

    • Landlord approval form
    • Record check form
    • Fingerprint verification form
    • Electronic funds transfer form
    • Additional application form (if applicable)

The following fees must be paid when submitting the application:

    • $100 application fee
    • $25 fee per additional location

Step 3 – Purchase a Surety Bond

Retailers who do not qualify for the ASL’s self-bonding program must purchase and maintain a surety bond in an amount determined by the ASL

How Do Arkansas Lottery Retailers Renew Their License?

To renew their license, lottery retailers in Arkansas should mail their completed renewal application, including a $50 renewal fee, to the following address:

Office of the Arkansas Lottery
Post Office Box 3238
Little Rock, AR 72203-3238

All Arkansas Lottery Licenses expire annually and must be renewed before their expiration date.

What Are the Insurance Requirements for the Arkansas Lottery License?

Arkansas does not require retailers to obtain any form of liability insurance as a prerequisite to obtaining a lottery license. Retailers who do not qualify for the ASL’s self-bonding program must purchase and maintain a surety bond in an amount determined by the ASL.

How Do Arkansas Lottery Retailers File Their Bond?

Lottery retailers should mail their completed bond form, including the power of attorney, to the following address:

Office of the Arkansas Lottery
Post Office Box 3238
Little Rock, AR 72203-3238

The Arkansas Licensed 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 of entity/individual(s) buying the bond
  • Surety company’s name and address
  • Bond amount
  • Date the bond is signed

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

To avoid claims against their bond, lottery retailers in Arkansas must ensure that they remit all sales proceeds and unsold tickets to the lottery commission.

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

Arkansas 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 Arkansas Licensed Lottery Retailer Customers?

Arkansas 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

2021-10-20T15:35:53+00:00

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