Minnesota Lottery Retailer Bond: A Comprehensive Guide
December 3, 2021
This guide provides information for insurance agents to help their customers obtain a Minnesota 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: Minnesota lottery retailers who do not meet the Minnesota State Lottery’s (MSL) credit history requirements
- Purpose: To ensure the public will receive compensation if the retailer fails to remit all funds owed to the MSL
- Who Regulates Lottery Retailers in Minnesota: The Minnesota State Lottery
Minnesota statute 349A.06 grants the MSL the authority to require retailers to purchase a surety bond prior to receiving a lottery license. The Minnesota legislature enacted the bonding requirement to ensure that the lottery corporation receives all funds owed to them by retailers. The bond amount is determined on a case-by-case basis and must either be $3,000 or two weeks of ticket sales based on the retailer’s 26-week average, whichever is higher.
What is the Purpose of the Minnesota Lottery Retailer Bond?
Minnesota requires certain lottery retailers to be bonded prior to obtaining a retailer license. The bond ensures that the retailer will comply with all regulations set forth in Minnesota statute Chapter 39A. Specifically, the bond ensures that the MSL will not suffer a financial loss if the retailer fails to remit any funds owed to them. The Minnesota Lottery Retailer bond does not protect the retailer who purchases it, but rather the MSL.
How Can an Insurance Agent Obtain a Minnesota Lottery Retailer Bond?
BondExchange makes obtaining a Minnesota 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?
The MSL dictates the bond amount must be either $3,000 or two weeks of ticket sales based on the retailer’s 26-week average, whichever is higher.
Is a Credit Check Required for the Minnesota Lottery Retailer Bond?
Surety companies will run a credit check on the owners of the retail company to determine eligibility and pricing for the Minnesota 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 Minnesota Lottery Retailer Bond Cost?
The Minnesota 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 Lottery Agent Bond Cost
|Credit Score||Bond Cost (1 year)|
|650 – 799||$200|
|600 – 649||$500|
*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 MSL requires all retailers who do not have a favorable credit history to obtain a surety bond for at least 6 months. After the retailer submits their license application, the MSL’s accounting department will conduct a credit review on the retailer and in turn determine if they need to be bonded. Current license holders who develop poor credit will also be required to purchase a surety bond for six months.
How do Retailers Apply for a Lottery License in Minnesota?
Lottery retailers in Minnesota must navigate several steps to secure their licenses. Below are the general guidelines, but applicants should refer to the application instructions for details on the process.
License Period – The Minnesota Lottery Retailer License expires annually and must be renewed before the expiration date
Step 1 – Complete the Application
All Minnesota Lottery Retailer License applications should be mailed to the following address:
Minnesota State Lottery
P.O. Box 130700
Roseville, MN 55113
Retailers must complete the application in its entirety, and submit the following items:
- Two completed retailer contracts
- $100 application fee (per store)
Step 2 – Purchase a Surety Bond
After reviewing the agent’s application and creditworthiness, the MSL will determine whether or not the applicant needs to purchase a surety bond. If the applicant is required to purchase a bond, they must buy one in an amount that is either $3,000 or two weeks of ticket sales based on the retailer’s 26-week average, whichever is higher.
How Do Minnesota Lottery Retailers Renew Their License?
The MLS will mail lottery retailers their renewal forms prior to their license expiration date. The Minnesota Lottery Retailer License expires annually and must be renewed before the expiration date. Retailers who do not meet the sales requirements of $100 per week for scratch and lottery retailers, or $200 per week for vending retailers, may have their license revoked.
What Are the Insurance Requirements for the Minnesota Lottery Retailer License?
Minnesota does not require retailers to obtain any form of liability insurance as a prerequisite to obtaining a lottery license. Retailers with poor credit may need to purchase a surety bond in an amount that is either $3,000 or two weeks of ticket sales based on the retailer’s 26-week average, whichever is higher.
How Do Minnesota Lottery Retailers File Their Bond?
Retailers agents should mail their completed bond form, including the power of attorney, to the following address:
Minnesota State Lottery
P.O. Box 130700
Roseville, MN 55113
The Minnesota 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 of entity/individual(s) buying the bond
- Surety company’s name, state and city of incorporation, and phone number
- Bond amount
- Date the bond is signed
- Witness signatures for the principal
What Can Minnesota Lottery Retailers Do to Avoid Claims Against Their Bond?
To avoid claims against their bond, lottery retailers in Minnesota must ensure that they remit all funds owed to the MSL.
What Other Insurance Products Can Agents Offer Lottery Retailers in Minnesota?
Minnesota 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 Minnesota Lottery Retailer Customers?
Minnesota 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