During the 2013 regular session of the Arkansas General Assembly, Sen. Robert Thompson introduced the “Arkansas Prize-Linked Savings Account Act of 2013” (SB 119) to establish a prize-linked savings (PLS) account program. In PLS programs, financial institutions offer consumers a savings product with a low minimum balance requirement in which accountholders make deposits, making them eligible for drawings for a large cash prize. The potential of winning a prize encourages greater savings; yet, unlike gambling, no one loses. PLS programs center on the entertainment aspect and fun of winning prizes, but without risking one’s principal balance. Not everybody gets a prize, but everybody “wins” by accumulating wealth.
As a relatively new concept, SBCP’s policy team worked with Sen. Thompson, the Arkansas Lottery Commission and Doorways to Dreams (D2D) Fund to consider the technicalities and feasibility of the legislation. Due to concerns regarding the best infrastructure for the PLS program, the bill did not become law. However, it was recommended for interim study to address those concerns and to determine if and how a PLS program could work in Arkansas.
In an effort to better assist policy makers and stakeholders in determining whether a PLS program could be a good fit for Arkansas, SBCP’s policy team released the latest edition of its policy brief series, Policy Points, entitled, “Everybody Wins: Creating a Successful Prize-Linked Savings Account Program in Arkansas.” This report explains the purpose and effectiveness of PLS accounts, outlines why a PLS program in Arkansas may greatly benefit the state and its people, and offers three PLS program alternatives for state policy consideration.
While state law is needed to create PLS accounts programs, federal law is needed to allow banks to participate in the program. Currently, federal law prohibits banks from offering PLS accounts but allows credit unions to do so. Last month, U.S. Senator Jerry Moran (R-KS) and U.S. Congressman Derek Kilmer (D-WA) introduced “The American Savings Promotion Act” (S.1587), which would remove federal regulatory barriers that prohibit banks from offering PLS accounts. Because of the policy team’s work on PLS accounts on a state level, Southern Bancorp Community Partners sent a letter to the bill’s sponsors endorsing the federal legislation which can be viewed here.
Southern Bancorp Community Partners has a long history of advocating for policies that provide opportunities for low-to-moderate income Arkansans to build wealth and enhance their quality of life. Supporting the creation of a successful prize-linked savings program in Arkansas is just another way to ensure Arkansans have the necessary financial tools to thrive.
To learn more about prize-linked savings or find out how you can help play a role in ensuring greater economic security for working Arkansans, contact Tamika Edwards, Director of Public Policy, at email@example.com.