Prize-Linked Savings in Canada: The Complete Guide

With prize-linked savings, the money you set aside gets you tickets for regular prize draws. The more you save, the more free tickets you earn, and a chance at real cash comes on top of the saving itself. It’s a decades-old, proven idea, and Lodavo is the first app to bring it to Canada. This guide explains what prize-linked savings is, how it works, where it came from, why it’s legal here, how it compares to a high-interest savings account, and how Lodavo fits in.

What’s prize-linked savings?

Prize-linked savings is a savings product where your saving earns you a chance at a prize and your savings are never spent or at risk. Instead of every saver collecting a small flat return, the value is pooled into prizes. A few savers win larger sums, everyone keeps their full balance, and saving becomes something you might actually look forward to.

The difference from a plain savings account is the shape of the reward, not the safety of your money. In a regular account, a known interest rate is added to your balance. In a bank-run prize-linked account, that would-be interest funds a draw instead, so you trade a small, predictable return for the chance at a much bigger one. A prize-linked app is different again: it holds none of your money, so your interest keeps arriving as usual and the draw is funded separately. Your balance is untouched in every version, and nothing you deposit is ever wagered.

How does prize-linked savings work?

The mechanics are simple: you keep saving in your own account, and the more you save the more free draw tickets you earn. A regular draw awards prizes, and your money stays yours the whole time. People who build a bigger habit get more chances to win, without ever paying to enter. You’re rewarded for the saving itself.

The part people get stuck on is where the prize money comes from if nobody buys a ticket. It doesn’t come from other savers’ deposits, and it’s not skimmed off your balance. It comes from one of two places: the interest a provider would otherwise have paid you, or a sponsor. The three models, side by side:

The most important row is the last one: your money is never spent to fund a prize. In the bank-run version the pool is built from interest that would otherwise have arrived as small individual payments, redirected so the upside is concentrated into prizes worth getting excited about. In the app version you don’t give up even that, because the provider never held your money to begin with.

Where did prize-linked savings come from?

Prize-linked savings isn’t a new fintech gimmick. It’s a model with a long, well-documented track record. The clearest example is the United Kingdom, where the government has run Premium Bonds (opens in a new tab) since 1956, with the first prize draw held in 1957. The principle is exactly the one above: rather than the stake being gambled, the interest on the bonds is distributed as prizes, and the government buys your bonds back at full price whenever you ask. They’re remarkably popular: more than 24 million people hold them, over a third of the UK population.

In North America, the breakthrough was Save to Win, the first large-scale prize-linked savings program in the United States. It launched in 2009 across eight Michigan credit unions, offering a $100,000 grand prize plus smaller draws to members who saved. According to the program’s results (opens in a new tab), nearly 12,000 accounts opened in under a year, and most participants had never held a long-term savings account before. The model later expanded to credit unions across many US states. The takeaway is consistent across both stories: when the downside is removed and a prize is added, people who weren’t saving start saving.

Is prize-linked savings legal in Canada? Is it gambling?

Prize-linked savings is legal in Canada, and it’s not a lottery, because it’s structured as a contest. It’s the same framework behind everyday Canadian contests like Tim Hortons’ Roll Up the Rim and McDonald’s Monopoly. Two things matter, and both trace to section 206 of the Criminal Code (opens in a new tab): no purchase can be required to enter, and winners answer a skill-testing question so the prize isn’t handed over by pure chance. Parliament never wrote that second one into law. It became universal anyway, and our guide to skill-testing questions explains how. Those familiar contests let you buy a coffee or a meal to play, with a free way to enter alongside it. Lodavo goes a step further, since there’s no paid option at all. Entry is always free, you earn tickets just by saving your own money, and the skill-testing question is what makes the draw a contest rather than a game of pure chance.

The deeper reason it’s not gambling is that you never put your own money at risk. In gambling, your stake can be lost. Here, your money stays in your own account and keeps earning whatever it already earns, so the worst case is simply that you saved and didn’t win this time. There’s no losing bet. We go through this distinction in full, with the relevant rules, on our guide to whether prize-linked savings is gambling.

Terms and conditions apply. No purchase necessary (alternate method of entry available). Skill-testing question required. Open to legal residents of Canada who are the age of majority. Odds depend on the number of eligible entries received. Full rules and odds at our contest rules.

Prize-linked savings vs a high-interest savings account (HISA)

A high-interest savings account and prize-linked savings solve different problems. A HISA pays you a known, steady interest rate, which is the right tool when you want a predictable, guaranteed return on a sum of money. A bank-run prize-linked account trades a slice of that guaranteed return for the chance at a much larger prize, while keeping your money just as safe. Neither is better in the abstract; they fit different goals. When prize-linked savings comes as an app, the two aren’t rivals at all, because the HISA keeps paying you and the draw sits on top of it.

Context matters here. As of June 2026, the Bank of Canada (opens in a new tab) overnight rate sits at 2.25 percent, and most everyday savings accounts pay well below the headline promotional rates banks advertise for limited windows. If you have a large balance and want certainty, a strong HISA is the better fit and you should take it, and an app-based draw lets you keep it and still enter. If your real problem is that you struggle to save at all, the guaranteed-but-tiny interest on a small balance isn’t motivating, and that’s exactly the gap prize-linked savings fills. For a side-by-side breakdown, see how traditional savings and prize-linked savings compare, or our roundup of the best savings apps in Canada for an app-by-app look.

Why does prize-linked savings help people actually save?

Most Canadians aren’t saving much right now. According to Statistics Canada (opens in a new tab), the household saving rate was 3.5 percent in the first quarter of 2026, near its lowest level in years. Telling people to save more rarely moves that number, because a few dollars of interest on a modest balance gives no real reason to start. The incentive is too small to feel.

Prize-linked savings changes the incentive without changing the safety. You get loss-free upside, the chance at a meaningful prize with nothing to lose, plus a recurring reason to open the app and watch your balance. That combination is what behavioural research behind programs like Save to Win found again and again: the draw turns saving into a habit with a payoff you can feel, and people who had never built savings before started doing it. It works by making the boring thing a little bit fun, never by shaming anyone for where they’re starting. If saving has never felt worth it to you, here’s why a prize makes saving stick.

How does Lodavo bring prize-linked savings to Canada?

Lodavo is Canada’s first prize-linked savings app, built in Montreal, and it’s free. You connect the bank account you already have through Plaid (opens in a new tab), which covers over 99 percent of deposit accounts in Canada, so you can track what you save each week and collect free tickets for it. The connection is read-only. Your savings stay at your own bank, earning whatever they already earn, and Lodavo isn’t a deposit account and pays no interest.

From there it runs on the model in this guide. The more you save each week, the more free draw tickets you earn, and the free weekly draw pays out, with a chance to win up to $10,000 and a guaranteed weekly prize of at least $100 going to a user every week. Payouts arrive by Interac e-Transfer or bank transfer. You can see which institutions connect on our supported banks page, check how every draw is verified on our provably fair page, and view past results under winning numbers.