Event Wagering Operator Bond - Arizona Department of Gaming in Arizona

Brief Summary

Arizona does not set a flat bond for sportsbooks. It sets a reserve, at least $500,000 and more once player balances and open wagers outgrow that number. A surety bond is one of the instruments the rule allows for that reserve, so an operator can meet some or all of it without locking up cash that could fund operations.

Arizona event wagering operators, along with designees, limited event wagering operators and management services providers, must keep a reserve under A.A.C. R19-4-113 equal to the greater of $500,000 or the amount needed to cover all outstanding event wagering liability and player account funds. The reserve may be held as cash, cash equivalents, payment processor reserves or receivables, an irrevocable letter of credit, a bond, or a mix. The Arizona Department of Gaming is the regulator.

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How to Apply for a Event Wagering Operator Bond:

• Calculate outstanding event wagering liability plus player account balances and compare it with $500,000.
• Decide how much of the reserve will be carried as a surety bond versus cash, letters of credit or processor reserves.
• Confirm the bond form, obligee wording and delivery method with the Arizona Department of Gaming.
• Provide the surety with audited financial statements and corporate ownership details for underwriting.
• Raise the bond amount when liability and player funds rise above the current reserve.

Detailed Information About the Arizona Event Wagering Operator Bond:

The amount moves with your book

The figure most people get wrong is the $500,000. It is a floor, not the requirement. Under Arizona Administrative Code R19-4-113(A), a responsible party must keep a reserve in whichever amount is greater, $500,000 or the amount needed to cover all outstanding event wagering liability plus the funds held in player accounts. As handle and player balances grow, the reserve has to grow with them.

Who must keep the reserve

R19-4-101 defines a responsible party as an event wagering operator, a designee, a limited event wagering operator or a management services provider. All of them fall under the reserve rule. The authority comes from A.R.S. 5-1313, which directs the Department of Gaming to set the amount of a bond in escrow and the cash on hand needed to ensure adequate reserves for payouts.

A bond is one option, not the only one

The rule lets the reserve be held as cash, cash equivalents, payment processor reserves, payment processor receivables, an irrevocable letter of credit, a bond, or any combination. Many operators combine a surety bond with cash so the reserve flexes without moving large sums in and out of the bank.

A separate investigation bond

A.R.S. 5-1310(B) lets the Department require event wagering operators, limited event wagering operators and suppliers applying for a license to post a bond sufficient to cover the anticipated cost of the applicant's background investigation. That is a different instrument from the payout reserve and is sized by the Department case by case.

Related obligations

Player funds must sit in bank accounts kept separate from all other corporate accounts unless the Department agrees otherwise, and the operator must notify the Department at least 180 days before ceasing operations with a written plan to settle liabilities and refund player funds. Confirm the current bond form, obligee wording and filing method with the Arizona Department of Gaming before the bond is issued. The premium is set by the surety based on the bond amount and the operator's financial strength.

Eligibility and Requirements for a Arizona Event Wagering Operator Bond:

• Reserve equal to the greater of $500,000 or total outstanding wagering liability and player funds under R19-4-113.
• Arizona Department of Gaming as regulator and obligee.
• Player funds held in separate bank accounts unless the Department agrees otherwise.
• Written notice to the Department at least 180 days before ceasing operations.
• Possible separate bond for background investigation costs under A.R.S. 5-1310(B).

Arizona Event Wagering Operator Bond FAQs:

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