Praise be to Allah, the Lord of the Worlds; and may His blessings and peace be upon our Prophet Muhammad and upon all his Family and Companions.
It is not permissible to buy these prize-bonds as they include interest and gambling at the same time.
The amount that is paid for purchasing bonds is nothing but a loan because no person is giving this amount for business in order to risk making some profit or loss. Thus the prize bonds are in reality a loan with interest. Instead of the government or bank giving interest to every prize-bond holder, the interest accumulate and then a draw is conducted whereby some of the prize-bond holders win and others lose; this is the reality of gambling.
Doctor Ali Saluss says regarding this: “It may be possible that a person with a small loan win thousands of pounds, whereas other person’s heavy loans do not get anything. So the first person took his share of interest and the share of a large number of people, whereas the share of the second person is taken by others. Each time, involved people who watch or follow this draw; become happy because of what they had won, or sad for what they had lost, and so on, waiting for another prize-bond draw. Is this not gambling?!“
Please refer to the following fatwa…
Allah knows best.