A new Illinois law opens the door for Illinois banks, savings banks, and credit unions to conduct savings promotion raffles and promote prize-linked savings products, effective January 1, 2016.
The Illinois legislation, Public Act 99-149, comes on the heels of recent federal legislation authorizing the use of savings promotion raffles, the American Savings Promotion Act. The federal legislation created an exception from lottery prohibitions for a “savings promotion raffle,” adding exceptions to the National Bank Act, Home Owners’ Loan Act, Federal Reserve Act, Federal Deposit Insurance Act, and federal criminal laws. Similarly, the Illinois law creates an exception from the gambling prohibitions in the Illinois Criminal Code and exempts savings promotion raffles from the Raffles and Poker Runs Act’s requirements. It also amends the Illinois Banking Act, Savings Bank Act, and Credit Union Act to expressly authorize Illinois-chartered banks and credit unions to conduct savings promotion raffles.
As defined in the federal and Illinois laws, a savings promotion raffle encourages customers to save by awarding a chance to win prizes based on the amount of money deposited in a savings account. The federal law’s preamble details the benefits of savings promotion raffles, noting that “in the States of Michigan and Nebraska, more than 42,000 individuals have opened prize-linked savings accounts and saved more than $72,000,000.”
The Illinois law adopts the federal law’s definition of “savings promotion raffle,” which is “a contest in which the sole consideration required for a chance of winning designated prizes is obtained by the deposit of a specified amount of money in a savings account or other savings program, where each ticket or entry has an equal chance of being drawn.” Under the Illinois law, an institution’s board of directors must authorize the savings promotion raffle, and the institution must “maintain records sufficient to facilitate an audit of the savings promotion raffle.” In addition, the IDFPR may issue a cease and desist order after examining a financial institution regarding the conduct of its raffle.
The Illinois law also makes unrelated changes to the Credit Union Act. Read the Illinois legislation and the federal American Savings Promotion Act for more information.