Premium bonds v National Lottery

Understanding The Odds: National Lottery vs. Premium Bonds

OLIVER L. Author

Last Updated: 25th October 2024

After working in the gambling industry for over a decade, Oliver spotted an opportunity to setup a resource for lottery bettors. CompareTheLotto.com was founded in 2014, with Bet49s.com and Bet49s.co.za following shortly after. The aim is to find the best odds, offers and information for lottery bettors.

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Note: *The following article is purely for fun. It is based on individual opinions and does not constitute advice. The drawing of lottery numbers is entirely random. Please always gamble responsibly. #Ad. Find out more on our How Our Site Works page.


In the UK, the National Lottery and Premium Bonds represent two distinct avenues for hoping to secure a windfall. While both are ingrained in British culture, they cater to different appetites for risk and reward. This post aims to demystify these two options, providing a clear, educated insight for those curious about dipping their toes into either—or both.

The National Lottery: A Game of Chance

The National Lottery, launched in 1994, is a state-franchised national lottery in the UK. It offers several games, but the most prominent is the Lotto, where players choose six numbers from 1 to 59. Draws occur twice a week, and the jackpot is awarded to players who match all six numbers. The odds of winning the Lotto jackpot are about 1 in 45 million per ticket.

Premium Bonds: A Government-Backed Investment

In contrast, Premium Bonds, introduced by the government in 1956, are a savings product issued by the National Savings and Investments (NS&I). Instead of interest, bond holders enter a monthly prize draw, with the chance to win tax-free prizes ranging from £25 to £1 million. The odds of winning a prize for each £1 bond number are 21,000 to 1, as of the latest available data.

Similarities:

  • Chance-Based Outcomes: Both the National Lottery and Premium Bonds rely on luck, with no skill involved in winning.
  • Government Association: The National Lottery is regulated by the Gambling Commission on behalf of the government, while Premium Bonds are issued by NS&I, a government department.
  • Prize Draws: Both involve periodic draws where winners are selected randomly.

Differences:

  • Purpose and Use: The National Lottery is purely for entertainment and gambling, with no return on investment unless you win. Premium Bonds, however, are an investment product, with the principal amount being safe and retrievable at any time.
  • Odds and Prizes: The odds of winning the National Lottery jackpot are significantly lower than winning any prize in the Premium Bonds draw. However, the potential jackpot in the Lottery is usually much larger than the maximum £1 million prize in Premium Bonds.
  • Keep or Lose Your Capital: Lottery spending is often considered a 'loss' as most players will not win significant amounts, while Premium Bonds can be cashed in, with the investor not losing their initial outlay.
  • Frequency and Size of Prizes: The Lottery has fixed draw days with varying jackpots, whereas Premium Bonds offer a consistent prize pool each month.
  • Good Causes: Any money you spend with the National Lottery goes towards Good Causes in the UK. This amounts to billions of pounds each year and funds things such as sport, museums and arts.

Key Points Comparison

National Lottery Premium Bonds
Cost to Enter Loser
(If you don’t win, you lose your money. Cost £2 Ticket)
Winner
(Your ‘stake’/initial investment is always safe. Minimum £25)
Size of Jackpot Winner
(Average Lotto jackpot £13M)
Loser
(Maximum win £1M)
Odds of Winning Jackpot Winner
(1 in 45M chance of winning)
Loser
(1 in 55B chance of winning jackpot per £1 Bond)
Odds of Winning £25 Winner
(1 in 97)
Loser
(1 in 21,000)
Tax on Winnings Tie
(No tax on winnings)
Tie
(No tax on winnings)
Average RTP (Return To Player) Loser
(50% RTP)
Winner
(104.6% RTP)

See the complete table of National Lottery Odds and Premium Bonds Odds.

What Is RTP?

Return to Player (RTP) is a percentage that represents the average amount of money a game returns to players over time. For example, an RTP of 50% means that for every £1 wagered, players can expect to get back 50p on average.

Clearly, on the table above, the National Lottery wins on more points. However, the fact that your ‘stake’/initial investment is always safe with Premium Bonds can’t be overstated.

Comparing Apples & Oranges

Although on the face of things, it seems like Premium Bonds and National Lottery are similar, it’s quite unfair to compare them side by side. Premium Bonds are more akin to a savings account. Currently, the averaged returns on Premium Bonds are 4.65%, which is more in line with a high interest savings account. As such, larger sums you have in savings would be better suited to Premium Bonds and keep the National Lottery as small sum bets.

At CompareTheLotto.com, we would consider Premium Bonds for larger sums of savings and the National Lottery only for much smaller sums when having a weekly flutter that you can comfortably afford to lose.

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