Prize-Linked Savings 2015 Legislation

Heather Morton 1/5/2016

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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.

Fourteen states had legislation regarding PLS accounts introduced or pending in the 2015 legislative session.

Prize Linked Savings Account Enacted Legislation

 

 

 

 

 

 

 

 

 

 

As of January, 16 states—Arkansas, Connecticut, Illinois, Indiana, Maine, Maryland, Michigan, Minnesota, Nebraska, New Jersey, New York, North Carolina, Oregon, Rhode Island, Virginia and Washington—allow credit unions and other financial institutions to hold savings promotion raffles.

 

State: Bill Number: Bill Summary:
Prize-Linked Savings 2015 Legislation
Alabama None  
Alaska None  
Arizona None  
Arkansas

H.B. 1642

Signed by governor 3/20/15, Act 589

 Creates the Arkansas Savings Promotion Act.
California None  
Colorado None  
Connecticut None  
Delaware None  
District of Columbia None  
Florida None  
Georgia None  
Guam Not available  
Hawaii None  
Idaho None  
Illinois

H.B. 2477

Signed by governor 7/28/15, Public Act 99-0149

Amends the Illinois Credit Union Act, the Illinois Banking Act, and the Savings Bank Act; provides that a credit union's board of directors may authorize a savings promotion raffle; provides that, if authorized by its board of directors, a state bank may conduct a savings promotion raffle; provides that the savings promotion raffle shall be conducted so that each token or ticket representing an entry in the savings promotion raffle has an equal chance of being drawn; defines a "savings promotion raffle"; makes conforming changes in the Raffles and Poker Runs Act and the Criminal Code of 2012; amends the Raffles and Poker Runs Act; provides that "raffle" does not include a savings promotion raffle authorized under the Illinois Banking Act, the Savings Bank Act, the Illinois Credit Union Act, the National Bank Act, or the Home Owners' Loan Act.
Illinois H.B. 2700 Amends the Illinois Credit Union Act. Provides that a credit union's board of directors may authorize a savings promotion raffle. Defines a "savings promotion raffle" to mean a raffle conducted by a credit union where the sole consideration required for a chance of winning designated prizes is the deposit of at least a specified amount of money in a savings account or other savings program offered by the credit union. Makes conforming changes in the Raffles and Poker Runs Act and the Criminal Code of 2012.
Indiana None  
Iowa None  
Kansas None  
Kentucky None  
Louisiana None  
Maine None  
Maryland

H.B. 558

Signed by governor 4/14/15, Chapter 95

S.B. 515

Vetoed by governor – duplicative 5/12/15

 Alters the circumstances under which specified depository institutions may conduct a savings promotion raffle. Repeals a requirement that a depository institution that offers a savings promotion raffle must post in specified locations and disclose in specified materials a specified statement describing the terms and conditions of the raffle. Repeals a requirement that the commissioner of Financial Regulation must approve a savings promotion raffle conducted by a banking institution.
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

Passed House 12/9/15

 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.
Minnesota

H.F. 1127

Signed by governor 5/14/15, Chapter 29

S.F. 1043

Indefinitely postponed 5/4/15

Relates to financial institutions; provides for savings promotion raffles.
Mississippi None  
Missouri None  
Montana None  
Nebraska

L.B. 160

Signed by governor 3/12/15

 Changes provisions relating to gift enterprises to expand from credit unions to financial institutions to participate in savings promotion raffles.
Nevada None  
New Hampshire None  
New Jersey

A.B. 3868

Substituted 12/17/15

S.B. 2495

Signed by governor 1/19/16, Chapter 236

 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 None  
N. Mariana Islands Not available  
Ohio None  
Oklahoma None  
Oregon H.B. 2726

Permits a credit union to conduct a savings promotion raffle, subject to specified conditions. Exempts a savings promotion raffle from the definition of “gambling.”
Oregon

H.B. 2893

Signed by governor 5/21/15, Chapter 137

Permits a financial institution to conduct a savings promotion raffle, subject to specified conditions. Exempts savings promotion raffles from the definition of “gambling.”
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

Passed Senate 6/2/15

 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

H.B. 1628

Vetoed by governor 6/20/15

Amends the Finance Code to authorize a credit union or financial institution to conduct a savings promotion raffle if each ticket or token representing an entry in the raffle has an equal probability of being drawn and the raffle is conducted in a manner that does not jeopardize the ability of the credit union or financial institution to operate in a safe and sound manner and does not mislead the credit union's members or the financial institution's depositors, as applicable. The bill defines "savings promotion raffle" as a raffle conducted by a credit union or financial institution in which the sole action required for a chance of winning a designated prize is the deposit of at least a specified amount of money in a savings account or other savings program offered by the credit union or financial institution.
Utah None  
Vermont None  
Virginia

H.B. 1487

Signed by governor 3/16/15, Chapter 154

S.B. 737

Signed by governor 2/26/15, Chapter 12

 Authorizes banks, savings institutions, and credit unions to sponsor savings promotions, which are contests or promotions (i) conducted for the purposes of encouraging depositors to build and maintain savings deposits and (ii) in which depositors are provided a chance of winning designated prizes.
Virgin Islands None  
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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