Governor Signs Off on Prize-Linked Savings Bill

September 24, 2014 at 7:46 am Leave a comment

It feels nice to be able to bring you good tidings this morning,  Yesterday, Governor Cuomo signed off on legislation (A.9037A (Robinson)/S.6805B (Lanza); Chapter 370) authorizing credit unions to offer prize-linked savings lottery programs.  The legislation also permits banks to offer the same products if and when bank regulators follow NCUA’s lead and authorize savings lotteries for banks.

I’ve talked about prize-linked saving initiatives in previous blogs.  They permit credit unions to pool resources and create lotteries for credit union members who deposit money into a savings account, typically a share certificate.  For example, in Michigan, which was the first state to adopt a program in 2009, credit unions banded together to offer a single statewide prize of $100,000.  The state’s credit unions also have smaller prizes given to lottery winners at individual credit unions.

The initiative has gained attention nationally.  According to a recent article in the New York Times, close to $96 million has been put away in prize-linked savings accounts.  They appeal to policy makers across the political spectrum who see them as a free-market way of weaning people off lottery tickets by providing them with an alternative way of satisfying their gambling fix while actually increasing their savings.

The legislation signed into law yesterday takes effect on September 23, 2015.  It authorizes the Department of Financial Services, in consultation with the State Gaming Commission, to promulgate regulations governing the program.  The next step in the process is to get credit unions together to decide how exactly they want New York’s program to work.  For those of you who attended our recent Legal and Compliance Conference, you already received an overview of the way the programs are typically set up.

Entry filed under: Advocacy, New York State. Tags: .

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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