How to Get a Lottery Agent License in California

 

How to Get a Lottery Agent License in California

Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your California lottery bond needs.

 

How Do I Get a Lottery Agent License?

If you are interested in becoming a lottery retailer in California, you must submit an evaluation request to the California Lottery Commission (CLC). You will then be contacted by your District Recruiter, who will help you through the application process. Only businesses that are properly registered with the California Secretary of State and the California Department of Tax and Fee Administration will be considered for a lottery retailer license.

 

What Does the Licensing Process Involve?

When you submit a completed, signed application for a California lottery retailer license, you are authorizing CLC to conduct checks into your business, your credit history and financial circumstances, and any criminal record you might have. Things like outstanding taxes owed to the state or unresolved judgments against you can be disqualifying.

The CLC Director has the option of requiring any applicant for a lottery retailer license to purchase a surety bond in an amount to be established by the Director. The most common reason for this is that an otherwise qualified applicant does not meet the CLC’s financial responsibility standards.

 

Why Is a Lottery Bond Required?

Lottery retailers have certain financial responsibilities—remitting lottery sales proceeds to CLC and making cash payouts on winning lottery tickets, for example. The bonding requirement provides protection for CLC (the bond’s “obligee”) and the public against monetary losses resulting from an act of fraud or other violation of the Lottery Retailer Contract committed by the retailer (the bond’s “principal”). The bond not only requires full compliance with the statutes governing the California Lottery, but also legally obligates the principal to pay all valid claims for damages.

 

How Does a Lottery Bond Work?

There are three parties to a California lottery surety bond: the obligee, the principal, and the bond’s guarantor, known as the “surety.” 

There are three parties to a Connecticut lottery bond: CLC (the “obligee” requiring the bond, the licensed lottery sales agent (the “principal”), and the company guaranteeing the payment of claims against the bond (the “surety”). The bond is the principal’s pledge to abide by all CLC regulations and to compensate any party who incurs a financial loss due to a violation committed by the principal. 

While the terms of the surety bond obligate the principal to pay all valid claims, the surety has guaranteed their payment. Consequently, the surety will pay a legitimate claim on the principal’s behalf and be reimbursed later. 

 

What Does a Lottery Bond Cost? 

California lottery bonds are subject to underwriting to determine an appropriate premium rate. The primary concern is the risk of the surety not being reimbursed by the principal. That risk is assessed based largely on the principal’s personal credit score.

A high credit score means that the principal has a history of honoring debts and is very likely to repay the surety, which merits a low premium rate, typically between one and two percent. Someone with a lower credit score presents a higher risk to the surety, which warrants a higher premium rate.

 

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