Prize-Linked Savings 2016 Legislation

Heather Morton 6/10/2016

Prize-linked savings (PLS) accounts encourage people to save money by adding a lottery-like feature to deposit accounts.

Deposits into savings accounts or certificates of deposit (CDs) are held in a financial institution risk-free (just like traditional savings accounts or CDs), and depositors are entered into a drawing based on the number or size of their deposits during a given period. They then have a chance to win prizes, which are funded through the interest that accrues across the pool of prize-linked accounts.

Twelve states had legislation regarding PLS accounts introduced or pending in the 2016 legislative session.

Prize-Linked Savings Account Enacted Legislation

 

 

 

 

 

 

 

 

 

 

As of June, 20 states—Arizona, Arkansas, Connecticut, Illinois, Indiana, Kansas, Louisiana, Maine, Maryland, Michigan, Minnesota, Nebraska, New Jersey, New York, North Carolina, Oregon, Rhode Island, South Carolina, Virginia and Washington—allow credit unions and other financial institutions to hold savings promotion raffles.

Prize-Linked Savings 2016 Legislation
State: Bill Number: Bill Summary:
Alabama None  
Alaska None  
Arizona

H.B. 2381

Passed House 2/18/16

Allows a credit union to offer a savings promotion account that includes an incentive in which the sole requirement to obtain the incentive is a deposit of a specified amount of money.
Arizona

H.B. 2471

Signed by governor 5/18/16, Chapter 332

Allows a credit union to offer a savings promotion account that includes an incentive in which the sole requirement to obtain the incentive is a deposit of a specified amount of money.
Arizona S.B. 1512

Authorizes a credit union to offer a savings promotion account that is a savings account including an incentive in which the sole consideration required to obtain the incentive is the deposit of a specified amount of money in the account.

Arkansas None  
California None  
Colorado None  
Connecticut None  
Delaware

H.B. 226

Passed House 3/24/16

This bill authorizes the use of “prize-linked” savings accounts in the state of Delaware. A deposit into the program makes the entrant eligible for a prize. The principal in the account remains untouched. This bill explicitly authorizes such programs in Delaware and clarifies that such programs do not constitute prohibited gambling or lottery practices.
District of Columbia None  
Florida None  
Georgia S.B. 403 Provides for the establishment of sweepstakes savings accounts by financial institutions; provides for definitions; provides for rule-making authority for the Department of Banking and Finance regarding such accounts; provides for advertising requirements for such accounts; amends Code §16-12-20 of the Official Code of Georgia Annotated, relating to definitions relative to gambling, so as to provide for an exclusion to a definition.
Guam Not available  
Hawaii None  
Idaho None  
Illinois None  
Indiana None  
Iowa None  
Kansas

S.B. 390

Signed by governor 5/6/16, Chapter 54

The bill allows a bank, savings bank, savings and loan association, or a credit union to conduct a savings promotion in which a person would deposit money into a savings account or other savings program in order to obtain entries and participate in the promotion. The bill requires the promotions be conducted in a manner that ensures each entry has an equal chance of winning the designated prize. The bill further stipulates the bank, savings bank, savings and loan association, or credit union offering the promotion must: (i) Fully disclose the terms and conditions of the promotion to each of its account holders; (ii) Maintain records sufficient to facilitate an audit of the promotion; (iii) Ensure that only account holders 18 years of age and older are permitted to participate; (iv) Not require any consideration; and (v) Offer an interest rate and charge fees on any promotion-qualifying account that are approximately the same as a comparable account that does not qualify for the promotion. Authorizes the State Bank commissioner and the Credit Union administrator to promulgate rules and regulations, as necessary, to effectuate the provisions pertaining to their respective financial institutions. Such rules and regulations must be promulgated by July 1, 2017. The bill further directs the Bank commissioner and Credit Union administrator to collaborate in order to promulgate rules and regulations affecting account holders that are consistent, other than the type of institution to which the regulations apply.
Kentucky None  
Louisiana

H.B. 681

Signed by governor 5/26/16, Act 257

Authorizes credit unions to offer savings promotion raffles to members.

Maine None  
Maryland None  
Massachusetts S.B. 495 Authorizes banks and credit unions to conduct a savings promotion raffle, provided that the financial institutions (1) conduct the savings promotion raffle in a manner that ensures that each entry has an equal chance of winning the designated prize; (2) fully disclose the terms and conditions of the savings promotion raffle to each qualified account holder; and (3) maintain records sufficient to facilitate an audit the savings promotion raffle program.
Massachusetts S.B. 546 Authorizes a bank to receive deposits in conjunction with a savings promotion raffle pursuant to the federal American Savings Promotion Act. For the purposes of this section the term “savings promotion raffle” means a contest in which the sole consideration required for a chance of winning designated prizes is obtained by the deposit of a specified amount of money in a savings account or other savings program, where each ticket or entry has an equal chance of being drawn, such contest being subject to regulations that may from time to time be promulgated by the appropriate federal regulator.
Michigan

H.B. 5022

Signed by governor 6/8/16, Public Act 157

Allows "loan or savings promotion" raffles if all of the following apply: (i) It must be conducted so that each token or ticket representing an entity in the raffle has an equal chance of being drawn. A credit union could not conduct a loan promotion raffle in a manner that jeopardizes the domestic credit union's safety and soundness or misleads its members. (ii) The director could examine the conduct of a loan promotion raffle and could issue a cease and desist order for violation of the section. (iii) The credit union would be required to maintain records sufficient to facilitate an audit of a savings promotion raffle. The bill defines "loan promotion raffle" to mean a raffle conducted by a domestic credit union where the sole consideration required for a chance of winning designated prizes is closing on a loan of at least a specified amount or depositing at least a specified amount.
Michigan

H.B. 5147

Passed House 2/10/16

Amends the Penal Code to specify that Chapter XLIV of the code, which addresses gambling crimes, does not apply to loan promotion raffles conducted by credit unions and banks.
Michigan

H.B. 5251

Signed by governor 6/8/16, Public Act 162

Amends the Banking Code to say that, if authorized by its board of directors, a bank could conduct a loan promotion raffle where each token or ticket representing any entry in the raffle has an equal chance of being drawn. A bank could not conduct a loan promotion raffle in a manner that jeopardizes the bank's safety and soundness or misleads it customers. In addition, a bank would have to maintain records sufficient to facilitate an examination of a loan promotion raffle.
Michigan

S.B. 751

Passed Senate 3/9/16

Amends the Banking Code to allow a bank to conduct a loan promotion raffle, if it met all of the following conditions: (i) The bank would have to conduct the raffle so that each token or ticket representing an entry had an equal chance of being drawn. (ii) The bank could not conduct the raffle in a manner that jeopardized the bank's safety and soundness, misled its customers, or violated federal law. (iii) The bank would have to maintain records sufficient to facilitate an examination of a loan promotion raffle. “Loan promotion raffle” means a raffle conducted by a bank where the sole consideration required for a chance at winning designated prizes is the closing on a loan with the bank of at least a specified amount of money.
Michigan

S.B. 752

Sent to governor 5/31/16

Amends the Michigan Penal Code to provide that Chapter 44 (Gambling) and Chapter 55 (Lottery) of the Code would not apply to a loan promotion raffle conducted by a state bank under §4111 of the Banking Code.
Minnesota None  
Mississippi None  
Missouri

H.B. 2125

Sent to governor 5/25/16

This bill authorizes eligible financial institutions to offer and conduct savings promotion programs. A savings promotion program is a contest that offers a participant chances to win prizes if he or she makes a minimum deposit into an eligible account.
Missouri

S.B. 833

Sent to governor 5/25/16

This bill permits eligible financial institutions to offer and conduct savings promotion programs. A savings promotion program is a contest offered by an eligible financial institution that offers participants chances to win prizes if they make a minimum deposit into an eligible account.
Montana No regular 2016 session  
Nebraska None  
Nevada No regular 2016 session  
New Hampshire None  
New Jersey

S.B. 374

Withdrawn from consideration 2/4/16

Authorizes state-chartered banks, savings banks, savings and loans, and credit unions to conduct certain savings account promotions.
New Mexico None  
New York None  
North Carolina

S.B. 327

Passed Senate 4/22/15

Allows banks to conduct savings promotion raffles.

North Dakota No regular 2016 session  
N. Mariana Islands Not available  
Ohio None  
Oklahoma None  
Oregon None  
Pennsylvania

H.B. 837

Passed House 5/13/15

Authorizes certain financial institutions to conduct savings promotion raffles; and provides for enforcement by the Department of Banking and Securities.
Puerto Rico None  
Rhode Island None  
South Carolina

S.B. 652

Signed by governor 6/3/16, Act 203

Authorizes financial institutions that do business in South Carolina to conduct savings promotion contests for members and customers of the financial institutions, subject to certain requirements, and authorizes the appropriate federal or state regulatory agency of each financial institution to oversee the conduct of the contests and issue cease and desist orders when necessary.
South Dakota None  
Tennessee None  
Texas None  
Utah None  
Vermont None  
Virginia None  
Virgin Islands Not available  
Washington None  
West Virginia None  
Wisconsin None  
Wyoming None  

 

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Heather Morton is a program principal in Fiscal Affairs. She covers financial services, alcohol production and sales, and medical malpractice issues for NCSL.

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