History of the Lottery

Lottery is a form of gambling wherein a prize, such as money or goods, is awarded to the winner by drawing lots. In the United States, state governments have exclusive rights to operate lotteries and use their profits to fund governmental programs. As of 2004, forty-four states and the District of Columbia have lotteries. Americans spend more than $80 billion on lottery tickets each year, even though the vast majority of winners end up bankrupt within a few years. Instead of purchasing a lottery ticket, people would be better off building an emergency fund or paying off their credit card debt.

Although the concept of lotteries dates back thousands of years, modern lotteries were first introduced in England during the sixteenth century. The first American lotteries were tied directly to the country’s settlement history, beginning with King James I of England’s lottery for land at his Jamestown colony in 1612. In the seventeenth and eighteenth centuries, lottery play expanded significantly as private groups began using it to raise funds for their towns, wars, colleges, and public-works projects.

In 1777, the British legislature passed a law requiring all private organizations that wanted to raise funds with a lottery to register with the government. The government established a commission to oversee the operation of the lottery and set rules for how it could be conducted.

The lottery grew popular in America, and was used to help fund the American Revolution and the formation of the early republic. Benjamin Franklin held a lottery to raise money for cannons to defend Philadelphia from the British in the American Revolution, and John Jay sponsored one during the founding of the United States to help finance his new nation’s government.

Today, state governments control and regulate lotteries, which have broad public support in most states. They gain that support by arguing that lottery revenues are “painless”—players voluntarily contribute to their own self-interest—as opposed to tax dollars derived from a citizen’s paycheck. Lottery supporters also emphasize that lotteries are a valuable source of revenue for specific institutions, such as schools.

Despite this public support, state lotteries are vulnerable to economic downturns, when their popularity is likely to decline. In the long run, they are likely to continue to be successful, however, as their popularity depends on the fact that the vast majority of players are relatively rich and middle-class (with fewer playing from low-income neighborhoods).

To attract this group, lotteries advertise heavily in convenience stores, where most people purchase tickets; make a wide range of products available for sale (e.g., scratch-off tickets), and develop extensive constituencies among convenience store operators, suppliers (heavy contributions by these companies to state political campaigns are frequently reported); teachers (in states in which lottery revenues are earmarked for education); and state legislators. The success of the lottery model also depends on a large number of lottery games that appeal to these various groups. As the number of games grows, so does the lottery’s ability to generate substantial revenues and profits.