Learn how to become licensed as a lottery retailer, and speak with an Single Source Insurance agent today about purchasing the lottery bond you�ll need.
How Can I Get Licensed as a Lottery Retailer?
South Dakota retailers who want to make extra money through lottery sales can apply for a license to sell scratch tickets and lotto tickets or for a video lottery operator license. Operators own the terminals and use technicians certified by the Lottery to maintain them. Both types of licenses are issued by the South Dakota Lottery Commission.
You can apply online using the links provided on the South Dakota Lottery website. Learn more about the role of lottery brokers and why lottery bonds are required.
Steps in the Licensing Process
The application process is pretty much the same for all types of South Dakota lottery licenses, with one major exception�applicants for a video lottery operator license must provide the Lottery Commission with a surety bond.
Why Is a Video Lottery Operator Bond Required?
In purchasing the required surety bond, a video lottery operator (the bond�s �principal�) guarantees compliance with all applicable state laws and Lottery Commission regulations. Any noncompliant act that causes financial harm to the Lottery (the bond�s �obligee�) or the public gives the injured party the right to seek compensation by filing a claim against the bond.
The required bond amount, which is the maximum amount that will be paid out on claims, is 1/18 of the state�s share of the estimated annual net income from the operator�s video lottery machines.
How Do South Dakota Video Lottery Operator Bonds Work?
There are three parties to a South Dakota lottery bond: the obligee, the principal, and the bond�s guarantor, known as the �surety.� The surety bond agreement is legally binding on all three.
When a claim is received the surety determines whether it is valid and approves it for payment. Although the terms of the surety bond legally obligate the principal to pay all valid claims, the surety has guaranteed that they will be paid.
Therefore, the usual practice is for the surety to pay a claim initially and is repaid later by the principal. This ensures swift resolution of the claim and gives the principal a little time to come up with the necessary funds to repay the debt to the surety. The surety can take legal action against the principal, if necessary, to recover the claim amount.
How Much Does a Lottery Bond Cost?
South Dakota video lottery operator bonds are subject to underwriting to determine the premium rate that the surety will assign the principal. The surety�s main concern is the risk of not being repaid for claims paid on the principal�s behalf.
The usual measure of that risk is the principal�s personal credit score.� The higher the credit score, the lower the risk of non-repayment and the lower the premium rate. �Someone with a lower credit score, however, is assumed to be a higher risk and will pay a higher premium rate.
Our surety bond professionals will get you the South Dakota lottery bond you need at a competitive rate.