Fatwa No : 89690
Shariah Ruling on Prize Bonds and the Prize Money Obtained from Them

Shariah Ruling on Prize Bonds and the Prize Money Obtained from Them

What do the respected scholars say regarding this issue: My father holds prize bonds. I would like to know whether prize bonds and the money obtained from them are permissible or not—by this I mean specifically the prize money. Also, if the prize bonds are sold, is the amount received from selling them permissible or not? There is another related question as well: If my father’s prize bond wins a prize, can I take a loan from him out of this prize money, and will that borrowed amount be permissible for me?

الجوابُ حامِدا ًو مُصلیِّا ً

First and foremost, it should be clearly understood that in the prize bond scheme there is no buying and selling of any commodity. Rather, the amount paid under this scheme is, in reality, a loan to the government, and whatever profit is given on it constitutes interest (Riba). The detailed mechanism is as follows: the government does not enter into an explicit agreement with each individual prize bond holder to pay interest on the loan given by him. However, collectively, with all prize bond holders, it is nevertheless agreed that prizes will definitely be distributed among them. If the government were not to do so, every prize bond holder would have the right not only to demand the distribution of prizes but could also compel the government through the courts to distribute the prizes.
In light of the above explanation, the true nature of prize bonds becomes clear: the amount of the prize bond is a loan to the government, without any fixed term, which can be reclaimed at any time. It should further be understood that whatever amount the bondholders receive in the form of prizes is received solely on the basis of this loan, which is collectively conditioned upon all prize bond holders. Any conditional benefit on a loan, according to the Qur’an, Hadith, and Islamic jurisprudence, is impermissible and constitutes interest. Therefore, receiving such prize money and using it for personal benefit is unlawful and prohibited.
A person is entitled only to reclaim the original amount of the prize bond—no more than that. If someone has mistakenly received prize money from prize bonds, then since it is interest and therefore unlawful—and the ruling regarding unlawful wealth is that if its rightful owner is known, it must be returned to him; and if the rightful owner is unknown or returning it is not possible, then it is obligatory to give it in charity on behalf of the owner, without the intention of reward—accordingly, such prize money must be given away in charity without the intention of reward.
As for the questioner taking a loan from his father out of this interest-based prize money and using it, this is not permissible.

مأخَذُ الفَتوی

قال الله تعالى : {وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا } [البقرة: 275]
و في الدر المختار: و في الأشباه كل قرض جر نفعا حرام اھ (5/ 166)
و في حاشية ابن عابدين (رد المحتار): (قوله كل قرض جر نفعا حرام) أي إذا كان مشروطا كما علم مما نقله عن البحر، وعن الخلاصة و في الذخيرة وإن لم يكن النفع مشروطا في القرض، فعلى قول الكرخي لا بأس به اھ (5/ 166)
و في الفتاوى الهندية: آكل الربا وكاسب الحرام أهدى إليه أو أضافه وغالب ماله حرام لا يقبل ولا يأكل ما لم يخبره أن ذلك المال أصله حلال ورثه أو استقرضه شا (5/ 343)