Colorado Lottery Retailer Bond: A Comprehensive Guide

October 20, 2021

This guide provides information for insurance agents to help their customers obtain a Colorado 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: $2,000 per retail location
• Who Needs it: Colorado lottery retailers who do not wish to participate in the state bonding program
• Purpose: To ensure the public will receive compensation if the vendor fails to remit funds owed to the Lottery Commission
• Who Regulates Lottery Retailers In Colorado: The Colorado Lottery Commission

Background

Colorado statute 24-35-205 requires all lottery ticket retailers to become bonded prior to obtaining a retailer license. The Colorado legislature enacted the bonding requirement to ensure that retailers engage in ethical business practices. Colorado allows retailers to be bonded by the state or “self-bond”. Retailers who choose to be bonded by the state must pay a $40 annual fee (per location) to the Lottery Commission. Retailers who choose to self-bond for this program must purchase and maintain a $2,000 (per location) surety bond to be eligible for licensure.

What is the Purpose of the Colorado Lottery Retailer Bond?

Colorado requires 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 licensing regulations set forth in Colorado statute 24-35-2. Specifically, the bond protects the public in the event the retailer fails to remit all funds owed to the Lottery Commission. In short, the bond is a type of insurance that protects the public if the retailer commits fraud.

How Can an Insurance Agent Obtain a Colorado Lottery Retailer Bond?

BondExchange makes obtaining a Colorado 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.

Is a Credit Check Required for the Colorado Lottery Retailer Bond?

Surety companies will run a credit check on the owners of the retail company to determine eligibility and pricing for the Colorado 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 Colorado Lottery Retailer Bond Cost?

The Colorado 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 Retailer Bond Cost

Who is Required to Purchase a Bond?

The Colorado Lottery Commission requires all retailers to be bonded prior to selling tickets. To become bonded, retailers can either pay a $40 annual fee (per location) to the lottery commission or self-bond by purchasing a $2,000 (per location) surety bond and filing it with the commission.

How do Retailers Apply for a Lottery License in Colorado?

Lottery retailers in Colorado must navigate several steps to secure their licenses. Below are the general guidelines, but applicants should refer to the licensing packet for details on the process.

License Period – All Colorado Lottery Licenses expire annually and must be renewed before their expiration date

Step 1 – Ensure the Minimum Sales Requirement can be Met

Colorado requires all lottery retailers to sell at least $2,700 per quarter ($208 a week) in lottery tickets to remain eligible for licensure. Retailers who do not meet this requirement will have their license revoked.

Step 2 – Purchase a Surety Bond

Retailers who choose to self-bond must purchase and maintain a $2,000 (per location) surety bond

Step 3 – Complete the Application

All Colorado lottery retailer applications must be mailed to the following address:

Colorado Lottery Attn: Retail Licensing
225 N Main St
Pueblo, CO 81003

Retailers must complete the application in its entirety, and pay the following fees:

• • $25 license fee
  • Instatallation costs (vaires)
  • $5 communication fee (per week)

After approving the retailer’s application, the Lottery Commission will install a lottery terminal in the retailer’s place of business. The retailer is responsible for all installation fees.

How Do Colorado Lottery Retailers Renew Their License?

Prior to the license expiration date, the lottery commission will contact the retail with instructions on how to renew their license.  All Colorado Lottery Licenses expire annually and must be renewed before their expiration date.

What Are the Insurance Requirements for the Colorado Lottery License?

Colorado does not require retailers to obtain any form of liability insurance as a prerequisite to obtaining a lottery license. Retailers who choose to self-bond must purchase and maintain a $2,000 (per location) surety bond.

How Do Colorado Lottery Retailers File Their Bond?

Lottery retailers should mail their completed bond form, including the power of attorney, to the following address:

Colorado Lottery Attn: Retail Licensing
225 N Main St
Pueblo, CO 81003

The Colorado 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 of entity/individual(s) buying the bond
• Surety company’s name and state of incorporation
• Bond amount
• Date the bond is signed

What Can Colorado Lottery Retailers Do to Avoid Claims Against Their Bond?

To avoid claims against their bond, lottery retailers in Colorado must ensure that they remit all funds owed to the lottery commission.

What Other Insurance Products Can Agents Offer Lottery Retailers in Colorado?

Colorado 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 Colorado Lottery Retailer Customers?

Colorado 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