What is Prize-Linked Savings?
Prize-linked savings (PLS) products are an innovative way to help individuals save, linking the fun and excitement of winning to savings behavior. Prize-linked savings offers potential savers the chance to win a prize based on the act of saving, linking the thrill of lottery or raffle play with a financial choice to save. It’s a win-win for consumers – they set some money aside into savings, gain interest and earn chances to win. While there are many prize winners, even those who don’t win a prize are winners – walking away with the savings they set aside and any interest earned. Thus, prize-linked saving products are an exciting way to engage consumers to save without any downside of losing. Prize-linked savings products have been successful internationally, but only a few years ago was the concept brought and tested in the United States.
Prize-Linked Savings in the United States
The idea to test a prize-linked savings concept in the United States came from the research of Peter Tufano, cofounder of Doorways to Dreams Fund (D2D), Dean of the Said Business School at Oxford University and former Harvard Business School Professor. In 2006, Doorways to Dreams Fund (D2D) partnered with Indiana Centra Credit Union to run a small scale pilot of a PLS product and study the first U.S. based prize-linked savings product. The Centra Super Savings Account offered accountholders a chance to win prizes each month, including laptop computers, mp3 players, gift cards, cash and more. Centra launched the project throughout its 22 branches on January 1, 2007, opened nearly 1,400 Super Savings Accounts and collected over a half million dollars in deposits in the first five months.
Building on the success of the Centra experience, Doorways to Dreams Fund (D2D), the Michigan Credit Union League (MCUL) and the Filene Research Institute began working in 2008 to launch a large scale prize-linked savings product in the state of Michigan. Michigan offered a unique opportunity to test a prize-linked savings promotion. Unlike many states which require legislative change to offer savings promotion raffles, Michigan’s law already allowed for credit unions to offer them. So, D2D, MCUL and the Filene Research Institute began designing the Save to Win  program, the first large scale test of a prize-linked savings program in the United States.
The Save to Win (STW) product in Michigan is designed as a 12-month share certificate that allows for unlimited deposits throughout the year. Only $25 is required to open the account, a low barrier to entry which makes the product accessible to all and attractive to more financially vulnerable consumers. A saver earns raffle tickets for every $25 deposited in the account, with a cap of 10 entries per month. This cap helps ensure that individuals who can’t save as much still have opportunities to win. Raffle tickets qualify participants for the chance to win monthly cash prizes and six (6) $10,000 grand prizes at the end of the year.
Save to Win Success in Michigan
The Save to Win program officially launched in Michigan in January 2009 with eight credit unions participating in the pilot program. By the end of the 2009 pilot year, the program had successfully attracted more than 11,000 savers to save $8.6 million. The number of participants and amount saved demonstrated the possibility of winning, both a large grand prize and small monthly prizes encourages people to save. The success of the program in its pilot year resulted in an expansion of the program in Michigan and has helped motivate legislative change in new states where credit unions can now offer prize-linked saving promotion raffles. As the program expands it shows the potential of the STW product to be an effective asset building tool for consumers, as a high percentage of accountholders stay the program year after year and as new consumers continue to join the program.
1) Strong demand exists for the Save to Win program, and it is successfully attracting new participants and engaging them in the act of saving.
Growth in the Michigan Save to Win Program
||2009 - 8 Credit Unions
||2010 - 36 Credit Union 
||2011 - 44 Credit Unions
||2012 - 58 Credit Unions
2) Consumers are building a longer-term savings habit with their Save to Win accounts, with 54% of 2009 Save to Win participants opening accounts in 2010 and saving balances increasing for these participants by 57%, on average, from 2009 to 2010.
3) Winning is a huge motivator for participation and savings. Winners are motivated to save more and more regularly than non-winners, and winning has the potential to improve the stickiness of the product. 73% of 2009 winners opened 2010 accounts vs. 54% of non-winners.
4) The product is attractive to all, but has features that make it accessible to more financially vulnerable consumers and helps them build savings.
Financial Vulnerable Consumers
||% in 2009
||% in 2011
5) The credit union industry is well suited to incubate and scale a prize-linked savings product, and the collaborative model (with credit unions pooling together) is important to the growth and scale of Save to Win.
While the program is successful in Michigan, more research and innovation is required to motivate more regular savings in the product and enhance its take-up and stickiness. D2D's continued work and research of Prize-Linked Savings has helped expand the Save to Win program to new states. In 2012, Nebraska launched the program in their state and in 2013, North Carolina and Washington joined the program and started promoting Save to Win to their members. For more information on the Save to Win program and research being done, view Prize Linked Savings. The following D2D Fund reports provide more insight into the research and findings from the Save to Win Program, as well as insights into product design for prize-linked savings programs:
Prize-Linked Savings and Financially Vulnerable Americans: Insights from a Five State Study
Save to Win 2009 Final Report
How to bring PLS to your state:
As a result of the success in Michigan, states throughout the country are interested in amending their laws to allow for prize-linked savings products. In addition to states where laws already allow for savings promotion raffles (Michigan, Alaska, Georgia, New Mexico and Arizona), the following states have passed explicit savings promotion raffle bills:
- Maryland (2010)
- Rhode Island (2010)
- Maine (2010)
- Nebraska (2011)
- Washington (2011)
- North Carolina (2011)
If you live in one of these states, great! Generally, you can work with one of your state credit unions and/or credit union league to develop a PLS product. If you do not live in one of these states, there are still options:
1. Legislative change: work with a coalition of financial institutions, asset building non-profits, legislators, and other interested parties to amend the law to allow for savings promotion raffles (i.e. PLS products).
2. Consider other program designs that would allow an organization or financial institution to offer a PLS product without legislative change. For example, several credit unions around the country offer a PLS-type product using sweepstakes rules rather than raffle rules.
 Save to Win is a Registered Service Mark of Doorways to Dreams Fund
 Due to difficulty collecting all data for analyses purposes, this represents 96% of active accounts in December 2010