A Prize Bond is a

lottery bond Lottery bonds are a type of government bond in which some randomly selected bonds within the issue are redeemed at a higher value than the face value of the bond. Lottery bonds have been issued by public authorities in Belgium, Ireland, Pakistan ...

, a non-interest bearing

security Security is protection from, or resilience against, potential harm (or other unwanted coercion). Beneficiaries (technically referents) of security may be persons and social groups, objects and institutions, ecosystems, or any other entity or ...

issued on behalf of the Irish Minister for Finance by the ''Prize Bond Company DAC''. Funds raised are used to offset government borrowing and are refundable to the bond owner on demand. Interest is returned to bond owners via prizes which are distributed by random selection of bonds. Similar prize bonds are also offered in Pakistan, by the Ministry of Finance, and in the UK, under the name

Premium Bonds Premium Bonds is a lottery bond scheme organised by the United Kingdom government since 1956. At present it is managed by the government's National Savings and Investments agency. The principle behind Premium Bonds is that rather than the s ...

Background

The 1956 Finance (Miscellaneous Provisions) Act is the primary legislation under which the bonds are authorised; the similar concept of

Premium Bond Premium Bonds is a lottery bond scheme organised by the Government of the United Kingdom, United Kingdom government since 1956. At present it is managed by the government's National Savings and Investments agency. The principle behind Premium ...

s were introduced in the United Kingdom at the same time. Bonds were first sold in March 1957, with the first draw held in September of that year. Originally the

Bank of Ireland Bank of Ireland Group plc () is a commercial bank operation in Ireland and one of the traditional Big Four Irish banks. Historically the premier banking organisation in Ireland, the bank occupies a unique position in Irish banking history. At ...

, as the government's banker, was the operator of the scheme. When the scheme commenced, the biannual draws were in September and March where by means of six drums the winning

serial number A serial number (SN) is a unique identifier used to ''uniquely'' identify an item, and is usually assigned incrementally or sequentially. Despite being called serial "numbers", they do not need to be strictly numerical and may contain letters ...

was drawn randomly; in 1972 the serial number was increased from six to seven digits for bonds issued after that time. In 1993 regulation was made for the conduct of the draws on a weekly basis using a

computer A computer is a machine that can be Computer programming, programmed to automatically Execution (computing), carry out sequences of arithmetic or logical operations (''computation''). Modern digital electronic computers can perform generic set ...

-driven

random number generator Random number generation is a process by which, often by means of a random number generator (RNG), a sequence of numbers or symbols is generated that cannot be reasonably predicted better than by random chance. This means that the particular ou ...

to determine winning numbers.

Organization

The Prize Bond Company is a joint venture between the founders

An Post (; literally 'The Post') is the state-owned provider of Mail, postal services in Republic of Ireland, Ireland. An Post provides a "universal postal service" to all parts of the country as a member of the Universal Postal Union. Services provide ...

and

FEXCO Fexco is an Ireland-based financial services and financial technology company focusing on bureau de change and payment card services. Its head office is located in Killorglin, County Kerry. As of 2019, Fexco reports it has more than 2,500 staff a ...

and is based in

Killorglin Killorglin () is a town in County Kerry, Ireland. As of the 2022 census, the town's population was 2,163. Killorglin is on the Ring of Kerry tourist route, and annual events include the August Puck Fair festival, which starts with the crownin ...

County Kerry County Kerry () is a Counties of Ireland, county on the southwest coast of Republic of Ireland, Ireland, within the Provinces of Ireland, province of Munster and the Southern Region, Ireland, Southern Region. It is bordered by two other countie ...

. The company was created in 1989 with issued share capital between the founders of 50% each and will operate the scheme under its current (as of 2011) contract until the end of 2019. Employees of the Prize Bond Company are seconded from the respective partner,

is responsible for administration, whilst An Post is responsible for accounting and marketing in addition to conducting the draws. The

National Treasury Management Agency The National Treasury Management Agency (NTMA; , GBCN) is the agency that manages the assets and liabilities of the Government of Ireland. It was established on 1 December 1990 to borrow for the Central Fund and manage the national debt. Since t ...

is responsible for the regulation of the company, since the Agency was established in 1990.

Finance

Originally bonds could be purchased as in units of five

Irish pound The pound ( Irish: ) was the currency of Ireland until 2002. Its ISO 4217 code was IEP, and the symbol was £ (or £Ir for distinction.) The Irish pound was replaced by the euro on 1 January 1999. Euro currency did not begin circulation unti ...

s, with a minimum purchase of £10. Today the unit price is 6.25

Euros The euro (currency symbol, symbol: euro sign, €; ISO 4217, currency code: EUR) is the official currency of 20 of the Member state of the European Union, member states of the European Union. This group of states is officially known as the ...

(equivalent to IR£4.92 at the final fixed exchange rate) and a minimum purchase of €25 is required. In September 2009 the Prize Bond fund exceeded €1bn for the first time. The weekly draw is held on Fridays at 12:30 in the

General Post Office The General Post Office (GPO) was the state postal system and telecommunications carrier of the United Kingdom until 1969. Established in England in the 17th century, the GPO was a state monopoly covering the dispatch of items from a specific ...

Dublin Dublin is the capital and largest city of Republic of Ireland, Ireland. Situated on Dublin Bay at the mouth of the River Liffey, it is in the Provinces of Ireland, province of Leinster, and is bordered on the south by the Dublin Mountains, pa ...

. Prizes range from €75 to a jackpot of €50,000 except for the last draw of each month, when the jackpot is €500,000. , the prize fund will almost treble in size to c. €48m and the size of the fund is now almost €4.7 billion Winnings are tax-free within

Ireland Ireland (, ; ; Ulster Scots dialect, Ulster-Scots: ) is an island in the North Atlantic Ocean, in Northwestern Europe. Geopolitically, the island is divided between the Republic of Ireland (officially Names of the Irish state, named Irelan ...

. There have been some concerns that the bonds do not represent value for money for the government. Of particular concern is the cost of administration relative to the cost of interest on borrowings.{{cite web , url=http://www.thepost.ie/archives/2006/0205/prize-bond-scheme-costs-more-than-borrowing-11546.html , title=Prize Bond scheme costs more than borrowing | the Post , accessdate=2011-01-20 , url-status=dead , archiveurl=https://web.archive.org/web/20111001050918/http://www.thepost.ie/archives/2006/0205/prize-bond-scheme-costs-more-than-borrowing-11546.html , archivedate=2011-10-01 , Sunday Business Post, February 05, 2006

References

Bonds (finance) Securities (finance) Economy of the Republic of Ireland