Sunday, August 31, 2014

A lottery where everybody wins

Posted By on Sun, Aug 31, 2014 at 7:11 AM

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  • cfed.org

Coincidence: The Arkansas Democrat-Gazette reported today on plans by state Sen. Jimmy Hickey to push a contract with a consultant who'll come up with ways to help the flagging Arkansas lottery. (Count me as skeptical about Hickey's good intentions. He's no lottery fan.)

But here's a winner from the New York Times: A report on the use of lottery gimmicks by savings institutions such as credit unions to encourage people to save by offering lottery drawings on deposits. 

They offer what are known as prize-linked savings accounts, which essentially treat every deposit as a ticket in a prizewinning raffle. The idea is to offer the thrill of gambling without the risk. Even perennial losers keep their savings.

These accounts have won support from a rare combination of liberal poverty advocates and conservatives who like the private market-based approach and emphasis on personal responsibility. In Congress, bills to modify federal banking laws and permit more financial institutions to offer prize-linked accounts have Republican and Democratic co-sponsors. And several states, including Indiana, Connecticut and New York, have modified their banking laws to allow credit unions to offer such programs.

Everybody wins. Losers still have savings, earning a speck of interest at today's rates.

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