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So, there's a really interesting way to get people to save. It is called the Prize Linked Savings Account. The idea is fairly simple - to encourage savings, savings accounts are randomly awarded prizes, the proceeds of which are paid from a slightly reduced interest rate. While the net cost to the bank is basically zero, the incentive has been proven statistically to dramatically increase savings rates among the poor, thus making them better off financially.

The problem, or so I have heard, is that the gaming industry views this as competition, and therefore banks who would do this must submit to all the rules and regulations of the gambling industry.

Is this the case? Are Prize-Linked Savings accounts only legal if they are done under the regulatory authority of gambling statutes (and hence state level things) in the US?

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  • Shhhh... Don't give banking lobbyists ideas!
    – user4012
    Dec 18, 2013 at 17:11
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    (The British equivalent is the Premium Bond, issued by NS&I, which is a Government agency.) Dec 19, 2013 at 10:52
  • @SteveMelnikoff Yes and we have had Premium Bonds since the 1950s. No one really considers them the equivalent of gambling. I have no detailed knowledge but I doubt that it is subject to the same regulations. The reason being, I strongly suspect, is because it does not have the same egregious effects on society as gambling.
    – WS2
    Dec 1, 2021 at 18:33

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No it is not always the case that, prized-linked savings accounts are regulated by gambling laws or gambling commissions.

In the states that they are legal (Michigan, Maine, Maryland, Nebraska, North Carolina, Rhode Island, and Washington), prized-linked savings (PLS) are allowed by state law, it is sometimes allowed under credit union laws or sometimes lottery laws. Usually, PLS accounts are considered savings promotion raffles. In general, credit unions and banks are prohibited by federal law from running PLS accounts, because they are considered raffles.

PLS accounts are generally governed by federal and state gambling laws. These laws determine whether banks or credit unions can run lotteries, raffles, or sweepstakes. Federal law prohibits banks from running lotteries and raffles.

North Carolina; SB 513 (2011); N.C.Gen. Stat.§ 54-109.64 ; Amended credit union laws to allow savings promotion raffles.

As for your other claim, it probably isn't the gaming industry that is most concerned with PLS accounts, it is probably state run lotteries, as previous examples have shown.

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  • If they are forbidden by federal law then they aren't legal in states since federal law is going to apply on the state level. In fact your (uncited!) quote doesn't say federal law prohibits banks, if anything it strongly implies federal law allows banks and credit unions to doe prize-linked savings, merely regulating how it is done.
    – dsollen
    Mar 16, 2023 at 20:32

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