The two national institutions have turned literally thousands of people into millionaires – but are your chances of striking it rich better when you invest money in Premium Bonds or buy a National Lottery ticket?
A fair few years ago one of my colleagues wrote an article saying you’d be better off buying a lottery ticket than investing in Premium Bonds. I disagreed. Strongly.
He quickly added that he didn’t mean taking money out of savings and gambling it – he had something much cleverer in mind.
Instead, he asked, would you be better off putting your money in a tax-free ISA, then using the interest it paid you to buy lottery tickets, rather than having your money in a Premium Bond that pays no interest, but gives you the chances of winning a prize.
To answer that definitively, you need to look at a whole host of different factors and now, more than a decade later, with different rules and payout rates for both options, I decided to try and answer it again.
And it turns out there is an answer.
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How to fairly compare the odds
First, we need some ground rules. The general advice is that to get the best chance of a fair return from Premium Bonds, you need to invest the most money you can.
Currently, that’s £50,000. The reason more is better is because every pound invested in a Premium Bond has its own chance of winning. Theoretically, you could win both monthly million prizes, and another 49,998 prices too, in a single month.
Of course, that’s astronomically unlikely, but the more times you play, the closer you get to the average luck.
Now, you can’t put £50,000 in an ISA in a single year, but you can build that amount up over a few years – if you’re lucky enough to have the spare cash and don’t mind using a fair chunk of your ISA allowance to get there.
That gets us to the starting point: £50,000 in Premium Bonds, £50,000 in a cash ISA.
Assuming you’re getting 4% interest on that ISA – a good rate, although not the best on the market right now – that means £2,000 in interest. That works out at 1,000 lottery tickets.
What they pay out overall
The current prize fund rate for Premium Bonds prize draw is 3.30%. That is, right off the bat, less than the 4% we’re earning from our ISA.
But we’re not earning money from the ISA in this scenario, we’re using it to buy Lotto tickets. So what’s the effective prize rate for the Lotto? 56%.
So, you can expect to earn 56% of 4% – or 2.24% with average luck. If you put money into the current top-paying instant access cash ISA, that rises a little to an effective rate of 2.53%.
But both of those figures are the overall averages for literally every one of the tens of millions of people and more than £100 billion invested or gambled on the two products each year.
As Andy’s regular feature about what people actually win in a year on Premium Bonds shows, it’s pretty easy to make a lot more, or less, than average – even with £50,000 invested.
So, what are the odds of winning then?
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The odds of winning a prize on Premium Bonds vs the lottery
Premium Bonds
National Savings and Investments – which has been running Premium Bonds since the 1950s – regularly adjusts both how likely you are to win with each bond and the total prize fund rate. However, this generally follows wider interest rate changes, so all comparisons are done with this month’s figures.
In May 2026, every £1 invested in Premium Bonds had a 23,000 to 1 chance of winning a prize.
At those rates, with the full £50,000 invested and average luck, you’d win 26 prizes over a year. Of course, not all prizes are equal – ranging from £25 to the full £1 million.
Lotto
The odds of winning any prize on the Lotto are far lower, at just 9.3 to one. So with average luck and 1,000 tickets, you should win 107 prizes.
Except, well, the easiest prize to win is a lucky dip – effectively another entry to the lottery. In fact, at 10.3 to one, you’re likely to win 97 lucky dips from your 1,000 tickets. That’s enough to win you another 9 lucky dips, which in turn is enough to win at least one more lucky dip most of the time.
So that’s a grand total of 117 winning tickets – it’s just a shame most of them won’t pay out anything.
Still, you should get an average of 11 cash prizes out of it.
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The likely payout from the Lotto and Premium Bonds
Of the almost six million prizes paid out in the May 2026 Premium Bond prize draw, the vast majority were for £100 or less.
Some 5,884,701 or the total 5,947,521 in fact. The thing you’re most likely to win with those 26 prizes over a year is £25 – with a little under half of the paid-out prizes being for that amount.
£50 and £100 are a bit more than half as common as the lowest prize, and as likely as each other. So a split of 12 x £25, 7 x £50 and 7 x £100 is pretty reasonable.
That’s £1,350 over the year with average luck, which works out at 2.7% of £50,000.
Lotto both pays out more for its lowest two prizes, and less overall. You get £30 for matching three numbers and £140 for 4 numbers.
The bad news is that, on average chances, 10 of your 11 cash prizes will be three-number matches. So £300. About half the time you’ll also get a four-number match, so £385 a year over two years – just 0.77%
That’s a clear win for Premium Bonds.
The odds of becoming a millionaire
This is where the numbers get silly for Premium Bonds. With more than £136 billion worth of Premium Bonds, the odds of any single bond winning a million each month are a mind-blowing 63,000,000,000 – that’s sixty-three billion – to one.
The good news is, in this scenario, you have 50,000 of them. The bad news is that still only reduces the odds to 1.26 million to one.
Over the year, with 12 draws happening, that drops again to 105,000 to one.
The National Lottery is a lot easier to win, in theory. The odds of matching all six numbers are 45 million to one.
With 1,000 entries, that drops to 45,000 to one. Still a longshot, but more than twice as likely than with Premium Bonds.
The even better news is that the lottery also pays out more than £1 million to winners. The lowest jackpot in the past 10 years was £1.8 million on 22 November, 2017 according to lottery.co.uk. The highest was £66 million on 9 January 2016.
There’s some bad news too, though. Multiple people can win a jackpot on the Lotto – with three people sharing the 22 March 2017 prize, netting “just” £663,276 each.
But you’re far more likely to walk away with more than £1 million than not – and possibly an awful lot more – if you match six numbers.
So, if you care less about your likely winnings, and more about the big prize, Lotto is where you’re better off.
More than twice as likely to win and probably taking home at least twice as much cash if you do.
A note of warning
Finally, it’s worth saying that every one of these figures is based on luck. And you’ll need truly massive doses of it for the big wins. It’s entirely possible you win absolutely nothing some months or with your lottery tickets.
If you want to actually grow your money, a standard savings account offers guaranteed returns. Returns worth thousands of pounds a year if you have £50,000 to spare.
Most of the time, for most people, the best return you can get isn’t either with Premium Bonds or using the interest from savings to play the lottery.
The average wins for Premium Bonds (£1,350) and 1,000 Lotto tickets (£385 a year over two years) fall far, far short of the £2,000 a 4% cash ISA will get you.
And if it’s fun you’re after rather than returns, think what you could do with £650 extra to spend in a weekend…
