The History of the Lottery


Since 1964, 37 states have adopted state lotteries. Despite the differences in the political environment and demographics of each state, the arguments for and against adoption, the structure of the resulting lottery, and its operations are very similar. In almost every case, the state establishes a monopoly for itself and then creates a state agency or public corporation to run the lottery (as opposed to licensing a private firm in return for a share of the profits). The lottery then begins with a modest number of relatively simple games and, due to constant pressure for additional revenues, progressively expands its offerings.

The lottery is a form of gambling that involves the awarding of prizes to ticket holders based on random selection. Prizes may take the form of money or goods. The earliest known European lotteries involved tickets for sale and prizes in the form of objects such as dinnerware; these were typically distributed as part of the entertainment at banquets and were not organized as a way to raise funds. The modern lottery is distinguished from other forms of gambling because it requires a payment of a consideration in order to have a chance to win.

In the early United States, public lotteries were frequently held to raise funds for a variety of public uses. These lotteries were popular and hailed as a painless way to pay taxes. Benjamin Franklin held a lottery to raise money for cannons to defend Philadelphia during the American Revolution. George Washington sponsored a lottery in 1768 to build roads across the Blue Ridge Mountains, and Thomas Jefferson attempted to hold one to relieve his crushing debts.

Many modern lotteries allow ticket holders to select their own numbers or use a computerized system to generate them. The total value of the prize pool is usually a fixed percentage of the total receipts, and the prize fund is replenished as necessary through ticket sales. Generally, a large prize is offered along with several smaller prizes.

Lottery organizers often sell their tickets at discounted prices and use the proceeds for publicity campaigns and other expenses, including paying commissions to retail outlets. They also invest a portion of the proceeds to fund the prize pool. They may also risk the prize fund by allowing a small percentage of the tickets to be sold for a higher price, thereby increasing the chances of winning the grand prize.

Most state-sponsored lotteries draw substantial and growing support from the general population, although the participation rates of specific groups differ significantly. These groups include young people, seniors, and lower-income persons, who tend to play more frequently and spend more on tickets. The lottery industry is also expanding into other areas, such as marketing the game to convenience stores and other nontraditional locations. The industry has come under fire, however, for its alleged role in encouraging compulsive gambling and regressive impact on low-income families. In addition, many experts believe that the lottery is not an effective means of raising revenue, and have advocated reducing or eliminating its operation.