Though some credit unions offered prize-linked savings accounts (PLSAs) before, the passage of the 2014 American Savings Promotion Act opened the door for more banks and even an app-based startup to offer more gamified savings accounts. PLSAs, which reward clients with lottery entries for contributing to their savings, allow institutions to pay a few account holders larger sums determined by a lottery rather than pay each account holder a small amount of interest each month. Unlike state lotteries where participants lose the cost of entry, PLSA account holders retain their savings in FDIC-insured accounts. Given that Americans spent about $70 billion on state lotteries in 2014 and that almost half of Americans have less than three months’ worth of savings, PLSAs could be a great way to encourage better savings habits while still providing account holders the thrill of potentially winning that jackpot.
San Francisco-based startup Long Game improves on the traditional PLSA with its mobile-app-based PLSA that unlike most of its kind also earns 0.10% interest. By making deposits and keeping money in their accounts, Long Game users earn coins that they can then use to play various odds-based games, such as slot machines, roulette wheels and even a power-ball-style weekly lottery. Winning games rewards them with more coins or cash prizes ranging from $0.10 to the weekly lottery grand prize of $1,000,000.
Long Game App Homepage
Because Long Game is not a bank, it relies on partnerships with money transfer service Dwolla to move users’ funds and Virginia-based Blue Ridge Bank to hold users’ deposits, sharing in the profit the bank earns by lending out users’ money. While Long Game manages the pooled account for users’ funds at the bank, users must also create a Dwolla account so they can transfer money between their external account and their Long Game account. Long Game also manages this Dwolla account, allowing users to initiate transfers from the Long Game app, but these transfers can take three to five business days. During this time the funds are held in the Dwolla account and are not FDIC-insured.
These partnerships may dissuade widespread adoption by those who feel uncomfortable about multiple parties having access to their bank accounts. But until more states update their gambling laws to allow for financial institutions to offer PLSAs nationwide, Long Game and other services like it will require such partnerships. Currently, Long Game must also offer an alternative, no-deposit-necessary method of entry to comply with sweepstakes laws. Meanwhile, online savings accounts from Ally, Discover Bank and digital-focused banking platforms offer account holders guaranteed interest rates around 1.00% and direct access to their funds.
Long Game’s success will depend on its bet that the gamification of saving will attract users and hold their attention as they build their savings. Whether or not its 70,000 users and 4.5 stars on the App Store lead to future success, Long Game is a proof of concept that building savings can be as fun and addicting as other mobile games.