Nebraska Lottery Retailer Bond: A Comprehensive Guide
December 7, 2021
This guide provides information for insurance agents to help their customers obtain a Nebraska Lottery Retailer Bond
At a Glance:
- Average Cost: Between 1.5% to 20% 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: Nebraska lottery retailers who do not meet the lottery division’s financial responsibility requirements
- Purpose: To ensure the public will receive compensation if the retailer fails to remit all funds owed to the lottery division
- Who Regulates Lottery Retailers in Nebraska: The Nebraska Department of Revenue’s Lottery Division
Nebraska statute 401.01A requires all lottery retailers operating in the state to contract with the lottery division prior to selling tickets. The Nebraska legislature enacted the contract laws and regulations to ensure that retailers engage in ethical business practices. To provide financial security for the enforcement of the contract provisions, retailers who do not meet the lottery division’s financial responsibility requirements must purchase and maintain a surety bond in an amount set forth by the lottery division.
What is the Purpose of the Nebraska Lottery Retailer Bond?
Nebraska requires retailers who do not meet the lottery division’s financial responsibility requirements to purchase a surety bond as part of the application process to obtain a retailer contract. The bond ensures that the public will receive compensation for financial harm if the retailer fails to comply with the regulations set forth in Nebraska statutes Title 370. Specifically, the bond protects the public in the event the retailer fails to remit all funds owed to the lottery division. In short, the bond is a type of insurance that protects the public if the retailer violates the provisions of their contract.
How Can an Insurance Agent Obtain a Nebraska Lottery Retailer Bond?
BondExchange makes obtaining a Nebraska 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?
Nebraska statute 406.01 grants the lottery division the authority to set the bond limit to any amount that they deem appropriate for each individual retailer. When determining the bond amount, the lottery division will examine the retailer’s financial responsibility and set the bond to an amount that ensures the lottery division will not suffer financial harm if the retailer fails to remit all funds owed.
Is a Credit Check Required for the Nebraska Lottery Bond?
Surety companies will run a credit check on the owners of the retail company to determine eligibility and pricing for the Nebraska Lottery 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 Nebraska Lottery Bond Cost?
The Nebraska Lottery 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 $10,000 bond requirement.
$10,000 Lottery Bond Cost
|Credit Score||Bond Cost (1 year)|
|650 – 799||$200|
|625 – 649||$500|
|600 – 624||$1,000|
|550 – 599||$2,000|
*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 lottery division requires all retailers who do not satisfy the department’s financial responsibility requirements to purchase a surety bond prior to selling lottery tickets. After the retailer submits their application, the lottery division will review it and determine whether or not the retailer must purchase a bond.
How do Retailers Apply for a Lottery Contract in Nebraska?
Lottery retailers in Nebraska must navigate several steps when applying for a retail contract. Below are the general guidelines, but applicants should refer to the contract regulations for details on the process.
Contract Period – Nebraska Lottery Retailer Contracts do not expire unless canceled, suspended, or revoked
Step 1 – Complete the Application
All Nebraska Lottery Retailer Contract applications should be mailed to the following address:
PO Box 98901
Lincoln, NE 68509-8901
The application consists of the following documents:
Step 2 – Purchase a Surety Bond
After the retailer submits their application, the lottery division will examine their financial responsibility to determine whether or not the retailer must purchase a surety bond. If the retailer does need to purchase a bond, then they must obtain one in an amount set by the lottery division.
Do Nebraska Lottery Retailers Need to Renew Their Contract?
No, all Nebraska Lottery Retailer Contracts do not expire unless canceled, suspended, or revoked
What Are the Insurance Requirements for Nebraska Lottery Retailers?
Nebraska does not require retailers to obtain any form of liability insurance as a prerequisite to obtaining a lottery contract. Retailers who do not meet the lottery division’s financial responsibility requirements must purchase and maintain a surety bond in an amount set by the lottery division.
How Do Nebraska Lottery Retailers File Their Bond?
Retailers should mail their completed bond form, including the power of attorney, to the following address:
PO Box 98901
Lincoln, NE 68509-8901
The Nebraska 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 location entity/individual(s) buying the bond
- Surety company’s name
- Bond amount
- Date the bond is signed
What Can Nebraska Lottery Retailers Do to Avoid Claims Against Their Bond?
To avoid claims against their bond, lottery retailers in Nebraska must ensure that they remit all funds owed to the lottery division.
What Other Insurance Products Can Agents Offer Lottery Retailers in Nebraska?
Nebraska does not require lottery retailers to obtain any form of liability insurance as a prerequisite to obtaining a retailer contract. 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 Nebraska Lottery Retailer Customers?
Nebraska 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.