CFED Scorecard

CFED Assets & Opportunity Scorecard

Financial Assets & Income
Prize-Linked Savings
Overview

Prize-linked savings (PLS) programs give savings accountholders the opportunity to win prizes when they make deposits. In these programs, financial institutions offer consumers a savings product with a low minimum balance requirement and accountholders make monthly deposits, which qualify them for monthly and/or annual drawings. The possibility of a prize encourages greater savings. Prize-linked savings programs focus on the entertainment value and fun of winning prizes, but without risking any principle and with the knowledge that one is building an asset. Not everyone “wins” one of the prizes, but everyone comes out ahead with increased savings.

What States Can Do

State laws can be an obstacle to the adoption of prize-linked savings programs. To enable PLS programs, states can change anti-gambling and gaming laws to allow credit unions or banks to hold private lotteries.

Strength of State Policies: Prize-Linked Savings

Does state allow for prize-linked savings? 1
StatePrize-linked savings? Legal for credit unions only or all financial institutionsStatus of program implementation
Alabama
Alaska 2
Arizona 2
Arkansas 3 Legal for all financial institutions
California 4
Colorado
Connecticut Legal for all financial institutions Program has been implemented
Delaware
District of Columbia
Florida 4
Georgia 2
Hawaii
Idaho
Illinois 3 Legal for all financial institutions
Indiana 3 Legal for all financial institutions Program has been implemented
Iowa
Kansas
Kentucky
Louisiana
Maine Legal for Credit Unions only Program has been implemented
Maryland Legal for all financial institutions
Massachusetts
Michigan 3 Legal for all financial institutions Program has been implemented
Minnesota 3 Legal for all financial institutions Program has been implemented
Mississippi
Missouri
Montana
Nebraska Legal for all financial institutions Program has been implemented
Nevada
New Hampshire
New Jersey
New Mexico 2
New York Legal for all financial institutions Program has been implemented
North Carolina Legal for Credit Unions only Program has been implemented
North Dakota
Ohio
Oklahoma
Oregon 3 Legal for all financial institutions
Pennsylvania
Rhode Island Legal for Credit Unions only Program has been implemented
South Carolina
South Dakota
Tennessee
Texas 4
Utah
Vermont
Virginia 3 Legal for all financial institutions Program has been implemented
Washington Legal for all financial institutions Program has been implemented
West Virginia
Wisconsin
Wyoming

Notes on the Data

1. "Legislative Success, as of March 2014," D2D Fund. Accessed July 7, 2015. Data also provided through e-mail correspondence with the D2D Fund in July 2015. States receive credit for supporting prize-linked savings if they utilize an available legal mechanism to allow credit unions within the state to operate PLS programs. In some cases, existing laws already permit PLS. Otherwise, a state must enact legislation. "www.ncsl.org/research/financial-services-and-commerce/prize-linked-savings-2015-legislation.aspx," NCLS. Accessed July 31, 2015.

2. Existing laws may allow for prize-linked savings: Alaska, Arizona, Georgia, Michigan, New Mexico.

3. Legislation passed in 2015: Arkansas, Minnesota, Oregon, and Virginia.

4. Research by the D2D Fund suggests that gambling laws in California, Florida and Texas would require a constitutional amendment to legalize prize-linked savings.

How States Are Assessed

States receive credit for supporting prize-linked savings if they utilize an available legal mechanism to allow credit unions or banks within the state to operate PLS programs. In some cases, existing laws already permit PLS. Otherwise, a state must enact legislation.

What States Have Done

Policymaker interest in PLS programs in the United States is growing. To date, 15 states have enacted legislation to allow PLS. In four states, existing laws may already allow for PLS. In at least three states, analysis suggests that authorizing PLS would require a constitutional amendment, a potentially huge barrier to overcome. Some states, such as Michigan, include a savings raffle “carve out,” which makes PLS programs feasible.

Acknowledgements

CFED thanks Joanna Smith-Ramani and Melissa Goldberg of the D2D Fund for their input and expertise on this policy issue.

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