The bond is designed to help protect the promotion’s participants against fraud done by the sweepstakes Sponsor if they fail to fulfill the prize to the winner(s) that were offered per the official rules.
Bonding is required by law if a prize meets a minimum value in certain states. The total dollar value of the prizes is the bond limit.
In the case of sweepstakes and contests, bonding is required by law in four states: New York, Florida, Rhodes Island, and Arizona. This is in the case of the prize value exceeding $5,000 in the first three states and $500 in Arizona only if the promotion is conducted in a retail establishment, respectively.