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Constitutional Amendment to Allow Prize-Linked Savings Accounts Filed in Texas Legislature
Thursday, January 12, 2017 7:00 AM

As you may remember, Rep. Eric Johnson (D-Dallas) successfully passed a bill in the 2015 Legislative Session that would have allowed credit unions and other financial institutions to conduct savings promotion raffles, which the Texas Credit Union Association worked with him to pass. The bill was vetoed by Gov. Abbott who believed that the bill would violate the Texas Constitution, which generally prohibits raffles and other types of gambling. 

And now we are on to round two. During the pre-filing phase of the 2017 Texas Legislative Session, Rep. Johnson has filed two related bills:

  • HB 471 which amends the statutory references to permit savings promotion raffles, and
  • HJR 37 which similarly amends the constitution. 

The legislature will have to pass both the bill and the joint resolution amending the Constitution for the proposal to become law. After that, the constitutional change will go to the Texas voters for approval in November. 

Prize-linked raffles have been successful in many other states. Credit unions encourage members to save, and once they meet the savings minimum and hold that balance for a certain time period, they are entered into a chance to win a prize. It's a great vehicle to encourage savings.

Johnson’s bill would permit credit unions and other financial institutions to offer savings promotion raffles. The sole action required for a chance to win must be the deposit of a specified amount of money.

Under the bill, required terms for such a savings raffle include:

  • Each entry must have an equal chance to win;
  • The raffle must not jeopardize credit union safety and soundness;
  • The raffle must not mislead members;
  • No special account opening fee can be assessed unless required for all non-raffle accounts also;
  • No special limits on withdrawal unless required for all non-raffle accounts also;
    • However, you can require a deposit of a certain amount to remain in savings for a certain period of time to count as an entry;
  • Must pay interest rate similar to other comparable accounts; and
  • Must maintain records for TCUD examination;

The Texas Credit Union Department is required to adopt rules governing administration of such accounts.

Johnson's bill clarifies that savings raffles are not sweepstakes and are not charitable raffles. It also clarifies that opening a savings raffle account does not constitute “consideration,” and such accounts are specifically listed as a defense to prosecution for gambling under the Penal Code.

Cornerstone plans to keep credit unions updated on the progress of these bills throughout the session. If you have questions, please contact Suzanne Yashewski, Cornerstone SVP regulatory compliance counsel, at or Jeff Huffman, president, Texas Credit Union Association, at