Some Iowa credit unions have thrown their support behind legislation that would allow financial institutions to conduct savings promotion raffles in the Hawkeye state.
According to Iowa Senate File 490, a participant would deposit a stated amount of money into specified types of savings accounts in order to participate in the raffle. A savings promotion may only be conducted by financial institutions, which includes state or federally chartered credit unions and banks.
The bill defines a savings promotion raffle as a drawing conducted by one or a group of financial institutions in which the chance of winning a designated prize or prizes is obtained by the deposit of a specified amount of money in a savings account, time deposit or other savings program offered.
Several credit union representatives recently expressed their support for the bill to Iowa Rep. Bob Kressig (D-Cedar Falls) during a credit union chapter lobbying visit.
"The intent is to promote savings and is modeled after a program in Michigan where participants are eligible to receive prizes for putting money into a savings account, certificate of deposit or some other savings instrument," said Kressig, who also serves on the board of the $1.7 billion Veridian Credit Union in Waterloo, Iowa.
The Michigan program is called "Save to Win." It offers members an account to build savings while also giving them a chance to win a $100,000 prize and monthly cash prizes, according to the Michigan Credit Union League’s website. A $25 deposit goes into a certificate of deposit with the goal of building savings. A member can have up to 10 chances to win each month. All the money deposited into the Save to Win account is still the member's, plus interest. Members are allowed to take one withdrawal from their Save to Win account in the 12-month period. However, a $25 withdrawal fee will apply.
Kressig said he heard about the Michigan program and was impressed that 56% of the participants were nonsavers. In 2009, more than 11,000 people participated.
"To turn that many people on to saving, that’s a huge benefit," he offered.
Kressig said his office found five banks in Iowa that were already participating in raffles with names such as "Dollar Bill Sweepstakes" and "Fall Into Money Sweepstakes." For that reason, he said he is confident the legislation will pass. At press time, the bill, which needs 26 votes to pass, was scheduled to be voted on in the Iowa Senate. From there, it would travel to the House, where 51 votes are needed.
"Like other issues, the bank lobby is opposed to the legislation," Kressig pointed out.