DC Sports Wagering Operator Bond – Class B: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a DC Sports Wagering Operator Bond
At a Glance:
- Lowest Cost: 1.5% of the bond amount per year based on the applicant’s credit
- Bond Amount: Equal to 50% of the operator’s tax revenue as determined on a semi-annual basis
- Who Needs it: All Class B sports wagering operators operating in DC
- Purpose: To ensure the public will receive compensation if the operator fails to pay out winnings owed to players
- Who Regulates Sports Wagering Operators in DC: The DC Office of Lottery and Gaming (OLG)
Background
DC Act 22-594 requires all sports wagering operators in the district to obtain a license with the Office of Lottery and Gaming. The DC legislature enacted the licensing laws and regulations to ensure that sports wagering operators engage in ethical business practices. To provide financial security for the enforcement of the licensing law, sports wagering operators must purchase and maintain a surety bond to be eligible for licensure.
What is the Purpose of the DC Sports Wagering Operator Bond?
DC requires sports wagering operators 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 operator fails to comply with the licensing regulations set forth in DC Act 22-594. Specifically, the bond protects the players in the event the operator fails to pay out winnings. In short, the bond is a type of insurance that protects the public if the operator breaks licensing laws.
How Can an Insurance Agent Obtain a DC Sports Wagering Operator Bond?
BondExchange makes obtaining a DC Sports Wagering Operator surety bond easy. Simply log in to your account and use our keyword search to find the “sports” 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.
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How is the Bond Amount Determined?
DC Act 22-594 dictates that the bond amount must be equal to 50% of the operator’s estimated tax revenue for their first year in business. The bond amount will be adjusted on a semi-annual basis to reflect the actual amount of tax revenue generated.
Is a Credit Check Required for the DC Sports Wagering Operator Bond?
Surety companies will run a credit check on the owners of the sports wagering company to determine eligibility and pricing for the DC Sports Wagering Operator Bond. Owners with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may 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 DC Sports Wagering Operator Bond Cost?
The DC Sports Wagering Operator surety bond can cost anywhere between 1.5% to 20% 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 $100,000 bond requirement.
$100,000 Sports Wagering Operator Bond Cost
| Credit Score | Bond Cost (1 year) | Bond Cost (1 month) |
|---|---|---|
| 800+ | $1,500 | $150 |
| 650 – 799 | $2,000 | $200 |
| 625 – 649 | $5,000 | $500 |
| 600 – 624 | $10,000 | $1,000 |
| 550 – 599 | $20,000 | $2,000 |
Who is Required to Purchase a Bond?
DC Act 22-594 defines sports wagering as the act of placing a bet on a sporting event, a portion of a sporting event, or on the performance of individual athletes. There are two types of DC Sports Wagering Operator licenses, Class A and Class B. Class A licenses are reserved solely for the District’s four stadiums/arenas, which are:
- Audi Field
- Capital One Arena
- Nationals Park
- St. Elizabeths East Entertainment and Sports Arena
There are no restrictions on the type of businesses that may obtain a Class B license. However, no Class B licenses will be issued to businesses located within two blocks of a Class A license holder or in areas where gambling is prohibited. All businesses applying for a Class B Sports Wagering Operator license must purchase a surety 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 Sports Wagering Operators Apply for a License in DC?
Sports wagering operators in DC must navigate several steps to secure their license. Below are the general guidelines, but license applicants should refer to the OLG’s FAQ page for details on the process.
License Period – All DC Class B Sports Wagering Operator Licenses are issued for 5 year periods and must be renewed before the expiration date
Step 1 – Obtain a Basic Business License
DC requires all operator applicants to obtain a basic business license prior to submitting their Sports Wagering Operator License application. Operators can obtain a basic business license here.
Step 2 – Complete the Application
All DC Sports Wagering Operator Class B License applications can be completed online here. The application process is intensive and requires the applicant to undergo a background check, disclose all relevant financial information, and submit various documents related to their business. Additionally, operators will need to pay a $50,000 application fee. The estimated time it takes to obtain a license is 90 days from the date the application is submitted, and the OLG will seriously vet each license application to ensure that they are of good moral character and have the financial capacity to handle all sports wagers.
Step 3 – Purchase a Surety Bond
Once their license application is approved, sports wagering operators will need to purchase and maintain a surety bond in an amount equal to 50% of the operator’s estimated tax revenue for their first year in business.
How Do DC Sports Wagering Operators Renew Their License?
Sports wagering operators can renew their licenses online here. Operators must pay a $50,000 fee when renewing their license application. All DC Class B Sports Wagering Operator Licenses are issued for 5 year periods and must be renewed before the expiration date.
What Are the Insurance Requirements for the DC Sports Wagering Operator License?
DC does not require sports wagering operators to purchase any form of liability insurance (aside from what their basic business license requires) as a prerequisite to obtaining a Class B license. Sports wagering operators will need to purchase and maintain a surety bond in an amount equal to 50% of the operator’s estimated tax revenue for their first year in business. The bond amount will be adjusted on a semi-annual basis to reflect the actual amount of tax revenue generated.
How Do DC Sports Wagering Operators File Their Bond?
Sports wagering operators should submit their completed bond form, including the power of attorney, electronically here. The surety bond requires signatures from both the surety company that issues the bond and a representative from the sports wagering company. The surety company should include the following information on the bond form:
- Legal name of entity/individual(s) buying the bond
- Surety company’s name and state of incorporation
- Bond amount
- Date the bond is signed
What Can DC Sports Wagering Operators Do to Avoid Claims Against Their Bond?
To avoid claims made against their bond, sports wagering operators in DC must ensure that they pay out all winnings owed to players and that they do not engage in any acts of fraud.
What Other Insurance Products Can Agents Offer Sports Wagering Operators in DC?
DC does not require sports wagering operators to purchase any form of liability insurance as a prerequisite to obtaining a business 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 DC Sports Wagering Operator Customers?
DC conveniently provides a public database to search for active Sports Wagering Operators in the district. The database can be accessed here. Contact BondExchange for help developing a marketing piece. Agents can also leverage our print-mail relationships for discounted mailing services.