Focus Report, Volume 85, Number 6, September 2017 Page: Page17
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Authorizing Legislature to allow banks to
* hold raffles promoting savings
HJR 37 by E. Johnson (Hancock)Background
Texas Constitution, Art. 3, sec. 47 requires the
Legislature to prohibit lotteries and gift enterprises
in the state, with certain exceptions, including the
state lottery, charitable bingo games, and charitable
raffles conducted by various nonprofit or religious
organizations.
Digest
Proposition 7 would amend Art. 3, sec. 47 of the
Texas Constitution to allow the Legislature to permit
credit unions and other financial institutions to conduct
promotional activities to encourage savings. Prizes could
be awarded to one or more of the institution's depositors
selected by lot.
* The ballot proposal reads: 'The constitutional
amendment relating to legislative authority to permit
credit unions and other financial institutions to award
prizes by lot to promote savings.
Supporters say
Proposition 7 would authorize the Legislature to
allow banks and credit unions to host savings promotion
raffles, also known as prize-linked savings accounts
(PLSAs), which offer incentives to save rather than
spend or gamble away earnings. Savings incentives
are needed in the state, as more than one-third of Texas
households lack a savings account, and about half do not
have a three-month emergency fund.
Many states have removed legal barriers to PLSAs,
which have led to millions of dollars in consumer
savings and thousands of new accounts. These savings
allow households to endure financial emergencies such
as car repairs or medical bills or to accumulate wealth
over time to pursue retirement, higher education, or
home ownership. Savings also reduce reliance on
sometimes destructive short-term lending.Savings promotion raffles are not gambling, as they
require no form of payment or consideration. They are
unlike other raffles because they directly benefit the
consumer even if the consumer does not win a prize.
Depositors could withdraw their money at any time and
thus could not lose as in a raffle in any other industry.
While the enabling legislation, HB 471 by E.
Johnson, probably would not be subject to constitutional
challenge, Proposition 7 is nonetheless necessary and
would head off any constitutional questions. When the
84th Legislature in 2015 passed a similar measure, HB
1628 by E. Johnson, the governor vetoed the bill on the
grounds that it would violate Art. 3, sec. 47,
Opponents say
Proposition 7, along with the enabling legislation,
HB 471 by E. Johnson, would be a carve-out for one
industry to conduct a raffle, which would be the only
non-charitable raffle allowed in the state. The state
should consider the equity of allowing a single industry
to conduct such raffles.
Other opponents say
Proposition 7 is unnecessary because the Texas
Constitution requires the prohibition of lotteries, which
involve some form of payment or consideration to enter.
Because a savings promotion raffle merely requires a
deposit into an ordinary savings account, it would not
be subject to the constitutional prohibition or challenge,
and thus Proposition 7 would have no functional effect.
Notes
Proposition 7's enabling legislation, HB 471 by E.
Johnson, would take effect on the date voters approved
the proposed amendment. HB 471 would allow credit
unions and financial institutions to hold savings
promotion raffles, where individuals could enter theHouse Research Organization Page 17
House Research Organization
Page 17
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Texas. Legislature. House of Representatives. Research Organization. Focus Report, Volume 85, Number 6, September 2017, periodical, September 7, 2017; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth1033148/m1/17/?q=%22~1~1%22~1: accessed July 16, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting UNT Libraries Government Documents Department.