In New Zealand this scheme was called "Bonus Bonds" and was wound up on 26 February 2024. Interest was charged on "wins" just like any other income. Apparently the average return was a paltry 1.5%.
Everyone knew someone's uncle who swore blind that he made heaps on the bonus bonds and had all his money "invested" in there, but I received some around my 10th birthday and they never struck a single prize. In 40 years.