Maryland Lottery Sales Agent Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a Maryland Lottery Sales Agent 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: Maryland lottery retailers who do not meet the financial responsibility requirements set by the Maryland State Lottery Agency (MSLA)
- Purpose: To ensure the public will receive compensation if the retailer fails to remit all funds owed to the MSLC
- Who Regulates Lottery Retailers in Maryland: The Maryland State Lottery Agency
Maryland statute 36.02.02.05 grants the MSLA the authority to require retailers to purchase a surety bond prior to receiving a lottery license. The Maryland legislature enacted the bonding requirement to provide financial protection to the public if the retailer violates licensing law. The MSLA has the sole authority to determine whether or not a retailer must purchase a bond. Additionally, the bond amount is determined on a case-by-case basis.
What is the Purpose of the Maryland Lottery Sales Agent Bond?
Maryland requires certain lottery retailers to be bonded prior to obtaining a retailer 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 Maryland statute 36.02. Specifically, the bond protects the public in the event the retailer fails to remit all funds owed to the MSLA. In short, the bond is a type of insurance that protects the public if the lottery retailer breaks licensing laws.
How Can an Insurance Agent Obtain a Maryland Lottery Sales Agent Bond?
BondExchange makes obtaining a Maryland Lottery Sales Agent 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?
Maryland statute 36.02.02.05 grants the MSLA the authority to set the bond amount on a case-by-case basis. There is no minimum or maximum amount specified in the statute, but the MLSA will seek to set the bond limit in an amount that provides them with the necessary financial protection if the retailer fails to remit funds owed. If your customer does need to purchase a bond, the MSLA will specify the required bond amount after they submit their license application.
Is a Credit Check Required for the Maryland Lottery Sales Agent Bond?
Surety companies will run a credit check on the owners of the retail company to determine eligibility and pricing for the Maryland Lottery Sales Agent 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 Maryland Lottery Sales Agent Bond Cost?
The Maryland Lottery Sales Agent 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 Lottery Agent Bond Cost
|Credit Score||Bond Cost (1 year)||Bond Cost (1 month)|
|650 – 799||$200||$20|
|600 – 649||$500||$50|
*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?
The MSLA will determine whether a retailer needs to purchase a bond after reviewing their license application. The MSLA will examine factors such as the retailer’s credit history, criminal record, and business infractions they have committed when determining whether or not the retailer needs a 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 Retailers Apply for a Lottery License in Maryland?
Lottery retailers in Maryland must navigate several steps to secure their licenses. Below are the general guidelines, but applicants should refer to the licensing statutes for details on the process.
Step 1 – Create a Retailer Account
All Maryland Lottery Retailer License applications are submitted electronically, and as a result, retailers must create an account with an MSLA prior to submitting their application. Retailers can create an account here.
Step 2 – Complete the Application
After creating an account, retailers must complete their license application electronically through the MSLA’s licensing portal. Retailers must complete the application in its entirety, and pay all required fees.
Step 3 – Purchase a Surety Bond
After the retailer submits their application, the MSLA will inform them whether or not they need to purchase a surety bond. Retailers who are required to purchase a bond will be informed of the required bond amount once the MSLA finishes processing their application.
What Are the Insurance Requirements for the Maryland Lottery Retailer License?
Maryland does not require retailers to obtain any form of liability insurance as a prerequisite to obtaining a lottery license. Retailers who do not meet the required financial responsibility requirements may need to purchase a surety bond in an amount set by the MSLA.
How Do Maryland Lottery Retailers File Their Bond?
Retailers must mail their completed bond forms, including the power of attorney, to the following address:
The Maryland State Lottery Agency
C/O Agent Bonds Unit
Montgomery Park Business Center
1800 Washington Boulevard – Suite 330
Baltimore, Maryland 21230
The Maryland Lottery Sales Agent 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, address, phone number, and email of entity/individual(s) buying the bond
- Surety company’s name, address, phone number, and email
- Bond amount
- Bond term
- Date the bond is signed
What Can Maryland Lottery Retailers Do to Avoid Claims Against Their Bond?
To avoid claims against their bond, lottery retailers in Maryland must ensure that they pay all funds owed to the MSLA on a weekly basis
What Other Insurance Products Can Agents Offer Lottery Retailers in Maryland?
Maryland does not require retailers to obtain any form of liability insurance as a prerequisite to obtaining a lottery 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 Maryland Lottery Retailer Customers?
Maryland 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.