What are surety bonds and why do I need them?
A surety bond is basically an insurance policy that New York and Florida require sponsors hold to guarantee all prizes are awarded.
If your game of chance promotion has a cumulative prize value that exceeds $5,000, surety bonds must be provided in the amount of the cumulative prize value and registered in New York and Florida. Promotion Activators provides and administers surety bonds, requisite forms and filing fees to New York and Florida within 24 hours.
So, if you are running a sweepstakes that features $50,000 in prizes, you’re required to provide New York and Florida a surety bond in the amount of $50,000. A surety bond is essentially an insurance policy held by New York and Florida to protect their residents by ensuring that the prizes advertised will ultimately be awarded. They are submitted along with the requisite forms and filing fees at the time of state registration
. In the off-chance a sponsor is unable to award an advertised prize due to financial insolvency, the bond provider would accept the responsibility and make the winner(s) whole. Since it is the surety bond provider that is assuming the risk, the rates offered may be dependent upon the financial health of your company.