Is it wrong to play the lottery with your savings?

Today we will discuss the morality of prize-linked savings (PLS). What is PLS? It is the idea that you put money in a bank account and that instead of earning interest on that money, you join a lottery pool that is paid out with that interest. So, in theory you could put $100 in the bank and earn $1 million with your interest.

You can read more about PLS from the Freakanomics folks here.

The monetary advantage: you never lose the original $100. If you play the state lottery, the chances of you losing your investment are very, very high.
The monetary disadvantage: the chance of winning is still lower than your chance of earning interest on that money, even if you only get 1 percent a year in interest.

My question is: is there any moral difference between playing the lottery with the interest on your savings and playing the state lottery at your corner market? My secondary question is: would you pay tithing on your increase if you won a PLS (we already know the Church does not accept tithing on lottery winnings).

Before we start, let’s make something very clear: if you regularly play the lottery, you are not making a good investment. Of all of the games of chance, the state lottery has among the worst odds. If you don’t believe me, read this, which calls the lottery a tax on stupid people.

President Hinckley regularly spoke out against the lottery and other forms of gambling.

So, I think it’s fair to say that the Church advises against playing the lottery. Speaking in secular terms, I advise against it because it’s a horrible investment, one of the worst you can make.

So, is PLS any different?

On the one hand, the answer may be yes, especially these days when other investments are extremely risky and you earn in the low single digits on all safe investment vehicles. If you put $10,000 in a savings account these days, even if you buy a CD, the interest rates are ridiculously low. You might earn $100 a year in interest. So, who cares about losing $100 when you might have a chance to win $1 million?

On the other, if you put that $100 in a PLS, and you don’t win, it’s exactly like spending $100 a year on the lottery, which President Hinckley has advised against. My guess is that your local bishop also wouldn’t accept tithing if you hit the jackpot, so there probably is no moral difference between a PLS and the state lottery. But, hey, I could be wrong: if you asked your bishop about paying tithing on interest, he would probably say yes. Why not pay tithing when your bank account suddenly explodes?

Another interesting thing to ponder: let’s say you learned how to buy shares and bought Facebook or Google when the stock was first being issued, and you make millions on that. That is a “game of chance,” right? There is no guarantee the stock will take off. Yet, you would probably be expected to pay tithing on that capital gain if you sold the stock.

According to, so far, only Michigan in the U.S. has a PLS system. There is a push on to allow such savings accounts in an attempt to push the savings rate in the U.S. It would certainly accomplish that goal. The problem is that most state lotteries probably wouldn’t accept PLS systems because they have state-wide monopolies on lotteries.

Being completely moral with your money is often more complicated than it seems.

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About Geoff B.

Geoff B graduated from Stanford University (class of 1985) and worked in journalism for several years until about 1992, when he took up his second career in telecommunications sales. He has held many callings in the Church, but his favorite calling is father and husband. Geoff is active in martial arts and loves hiking and skiing. Geoff has five children and lives in Colorado.

8 thoughts on “Is it wrong to play the lottery with your savings?

  1. Pingback: Tweets that mention » Is it wrong to play the lottery with your savings? The Millennial Star --

  2. Kent, sorry, did not even see that. We both must have heard/read the same Freakonomics report. Can I say that great minds think alike?

  3. It depends on how soon you need your investment back, but there are plenty of investments with long term (20 year+) returns that far exceed anything you can get in a savings account.

    There is no law of economics that says that anything that is 100% safe will receive any return at all. After inflation, most savers (not investors, savers) probably lose money every year. So you have to do your homework, take the long view, and invest in enterprises that will enrich more than the people who get bonuses from paper profits and debt depredation.

    Lottery linked savings accounts are silly and irresponsible, but the real criminals here are the people playing the lottery with other people’s savings. The fractional reserve banking system, which is the greatest scam ever pulled.

  4. This system is safer than putting your money in the stock market, so it’s hardly a game of chance like the lottery. With the lack of interest in anything that is as safe as a savings account, I’d probably use this if my credit union started offering it.

  5. To put it another way, my credit union randomly gave a customer $500 last month. Every member that used their debit card during the month was automatically entered for a chance to win. I see no difference between using my debit card and possibly getting that $500 and this plan where I would randomly get a bonus.

  6. This system is safer than putting your money in the stock market

    If you need your investment in the next five years, sure. If you need your investment twenty or more years from now, putting it in a savings account is little better than throwing your money away, because it will be eaten away in real terms by inflation.

    Whereas a diversified basket of stocks over twenty or more years is about the safest investment you can make, where “safe” is defined in terms of the risk adjusted expected value of the investment at some future time.

    A conservative estimate is that stocks will beat inflation, on average, by five percent a year over twenty years. Where with a savings account you are losing money every year in real terms.

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