Playing to win 

When people think the lottery is their only way out of poverty, it says more about the desperate lack of financial security-building options in the United States than it does about the players' lack of judgment.

A surprising number of low-income Americans — 38 percent — see the lottery as their best shot at achieving significant wealth, according to a 2006 survey by the Consumer Federation of America. It's easy to respond with derision to such attitudes. But when people think the lottery is their only way out of poverty, it says more about the desperate lack of financial security-building options in the United States than it does about the players' lack of judgment.

Arkansas's newest poverty-fighting tool, which looks like a combination between a Powerball ticket and a savings account, could change that. This new "prize-linked savings" option is open to anyone. If you save a little cash (and don't withdraw it), you are entered to win a prize. If you don't win, you still get to keep all of your money. Some call it a "no-lose lottery," and it has been a game changer for low-income families in states like Michigan and Nebraska. In both places, the vast majority of participants had never saved before, lived on modest incomes, or were asset poor. Nonetheless, participants' average year-end savings balance was over $2,000 and more than 90 percent continued their savings habits into the next year.

One successful, multistate prize-linked savings product called "Save to Win" allows credit union members to open yearlong share certificates for just $25. During that year, participants can't make withdrawals, but they can make as many deposits as they like. Every $25 deposit (with a limit of 10 per month) earns another entry into the raffle for prizes, which are awarded randomly every month and every quarter and which range from $25 to $5,000. Save to Win happens to use credit unions, but Arkansas banks can hold similar raffles. Banks and credit unions benefit by attracting new customers and can offset the cost of prizes by offering lower interest rates than normal savings accounts or acquiring grants.

As of 2014, over $115 million has been saved nationally in prize-linked accounts, with most of the participants being financially vulnerable families. In a 2015 study by the nonprofit Doorways to Dreams Fund, a 35-year-old police officer with a prize-linked savings account said, "I'm doing so much better. I have an emergency fund, I'm paying down my debt. ... It's changed how I feel about my future." These accounts are life changing: Because they are fun, they get people excited about building healthy savings habits. For a family living on a razor-thin budget, that financial cushion could mean being able to afford a major car repair, getting through a week without a paycheck, or finally catching up on household debts.

Without any guidance, building up cash for a rainy day is especially hard for many Arkansans, who are less likely to have a savings account than are residents of any other state, according to the Corporation for Enterprise Development. Despite a historic drop in unemployment, our jobs still pay too little: The Arkansas median hourly wage was about $1 behind Louisiana, Oklahoma and Texas in 2014. Job outlooks are even worse for minorities. If you are an African-American resident of Arkansas, you can expect to make about $4 an hour less than your white neighbors.

We make these problems worse by cutting taxes for everyone except the least well-off. A $100 million tax cut package in 2015 completely left out the bottom 20 percent of workers. Legislators also have repeatedly shot down an asset-building tool called the Earned Income Tax Credit that would help working families; Arkansas is still among the few states that don't have such a tax credit at the state level. Even gains from the economic recovery have gone almost exclusively to the wealthy — the bottom fifth of Arkansas workers are stuck with the same wages they had in 2009, while the top fifth have enjoyed a 2.4 percent bump in income. All of these factors combine to make prize-linked savings a unique opportunity to change the asset poverty landscape in Arkansas.

Unlike traditional lottery programs, prize-linked savings accounts entail no direct state involvement, but legislation is required to get around legal restrictions on gambling. In 2014, the American Savings Promotion Act cleared federal barriers to prize-linked savings programs, and in 2015 Arkansas passed a bill allowing our banking institutions to participate. However, it is up to banks and credit unions to get the ball rolling, and only a handful in Arkansas have so far taken the initiative on prize-linked savings programs. This innovative tool can't work unless we get the conversation started.

Eleanor Wheeler is a senior policy analyst for Arkansas Advocates for Children and Families.


From the ArkTimes store


Subscribe to this thread:

Add a comment

More by Ellie Wheeler

  • No relief for renters

    If you are hoping to see new laws that improve rights for people who rent homes or apartments in Arkansas, you will find disappointing two bills proposed so far this legislative session — SB 25, by Sen. Blake Johnson (R-Corning), and HB 1166, by Rep. Laurie Rushing (R-Hot Springs). Even if both bills become statute, Arkansas would still have the worst landlord tenant laws in the country.
    • Feb 2, 2017
  • Let them eat cake

    An unproductive and harmful bill attempting to curb obesity passed easily out of committee last week at the state legislature. House Bill 1035 attempts to address this serious public health issue by preventing poor families who rely on SNAP (the federal Supplemental Nutrition Assistance Program, formerly called food stamps) from purchasing certain items such as candy and sodas.
    • Jan 26, 2017
  • Help all veterans

    Veteran-specific bills often miss the mark on helping the most sympathetic military families by focusing on retirement income.
    • Dec 22, 2016
  • More »

Readers also liked…

  • Schlafly's influence

    Phyllis Schlafly, mother, attorney and longtime antifeminist, died recently. What Schlafly promoted was not novel or new. Men had been saying that men and women were not equal for years. However, anti-feminism, anti-women language had much more power coming from a woman who professed to be looking out for the good of all women and families.
    • Sep 15, 2016
  • Seven

    The controversy over the Ten Commandments monument on the Capitol lawn just won't go away.
    • Feb 9, 2017
  • Why a change of leadership at the LRSD now?

    Johnny Key's abrupt, unilateral decision to not renew Baker Kurrus' contract as superintendent strikes us as shortsighted, misguided and detrimental to the education of our children and the health of our community.
    • Apr 21, 2016

Most Shared

Latest in Guest Writer

  • Pay attention

    If anyone thinks that a crisis with the Power Ultra Lounge shooting, then he hasn't been paying attention to Little Rock.
    • Jul 20, 2017
  • War reporter

    Ray Moseley: Native Texan. Naturalized Arkansan. Reporter, world traveler, confidant of Queen Elizabeth II.
    • Jun 22, 2017
  • Vote no on school tax

    I have never voted against a school tax in my life, but I will be voting against the debt service millage extension for the Little Rock School District.
    • May 4, 2017
  • More »

Event Calendar

« »


2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31  

Most Viewed

  • Narrow opening for Arkansas Democrats

    "Somebody in this room — it's time to go big or go home." At the Democratic Party of Arkansas's Clinton Dinner last weekend, Gov. John Bel Edwards of Louisiana used his platform as keynote speaker to embolden a candidate to step up to run for governor against incumbent Republican Governor Hutchinson.
  • Head-shaking

    Another edition of so-much-bad-news-so-little space.
  • Buyer remorse

    Out here in flyover country, you can't hardly go by the feed store without running into a reporter doing one of those Wisdom of the Heartland stories.
  • Not Whitewater

    Just think: If Democrats had turned out 78,000 more votes in three states in November, people could be reveling today in the prospect of impeaching and convicting President Hillary Clinton, not Donald Trump, as some Republican lawmakers had promised to try to do if she won.

Most Recent Comments

  • Re: Another Jesus

    • I always enjoy reading your articles Autumn. You keep being the caring person you are…

    • on July 26, 2017
  • Re: Another Jesus

    • Sorry, I have never written about Hillary Clinton's "blunders" in Benghazi. Since you call them…

    • on July 25, 2017
  • Re: Another Jesus

    • IBS, were you there in Benghazi to personally witness all of Hillary's blunders like you…

    • on July 23, 2017

© 2017 Arkansas Times | 201 East Markham, Suite 200, Little Rock, AR 72201
Powered by Foundation