The History of the Lottery

The lottery is a form of gambling where participants pay for the chance to win prizes. Prizes can be money, goods or services. In the United States, state governments run lotteries to raise revenue for public purposes. People may also choose to play private lotteries. Private lotteries offer more diverse prizes and usually higher odds of winning.

The idea of determining fates and allocating goods and services by drawing lots has a long history in human culture. The casting of lots is even cited in the Bible. The modern state-run lottery, however, is a relatively recent development. In the twentieth century, most states adopted the practice. Lottery advocates marketed it as a way to avoid the need for tax increases, which would have been extremely unpopular in an era when anti-tax sentiment was at its peak.

In the early years, the lottery was a highly successful way to subsidize public works projects and social programs. Harvard, Yale and Princeton were largely financed by it, and the Continental Congress tried to use one to finance the Revolutionary War.

But the lottery’s popularity quickly began to diverge from its original purpose. In the nineteen-sixties, state governments’ budgets ran aground under the weight of soaring inflation and the cost of the Vietnam War. It became impossible to balance the books without raising taxes or cutting services, and both options were extremely unpopular with voters.

States turned to the lottery to solve their budgetary crises. Colorado, Florida, Iowa, Illinois, Indiana, Kansas, Montana, Minnesota, Nebraska, New Mexico, Oregon, South Dakota and Washington started lotteries in the 1970s, attracting people from around the country. By the end of the decade, twelve more states (Connecticut, Delaware, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, Ohio, Pennsylvania, Rhode Island, Tennessee and Vermont) had joined them.

By the late 1980s, participation in the lotteries was booming and state governments were spending about half of their lottery revenues on prizes. The rest went to administrative costs, including sales and marketing, and retailers’ commissions. Retailers sold the tickets from stand-alone ticket booths or in stores such as convenience, grocery, gas and drug stores, department and clothing stores, bowling alleys, bars and restaurants and newsstands.

In a 1994 survey by the National Office of Research, nearly 186,000 retailers were selling lottery tickets nationwide. The majority were convenience stores, but a significant number were also found in supermarkets, auto parts and service centers, discount and drug stores, service stations, restaurants, bars and bowling alleys. A smaller percentage were sold in banks, credit unions and savings and loans associations.

Retailers receive a commission on each ticket they sell, and many of them participate in incentive-based programs where they are paid a bonus for meeting sales targets. These incentives are meant to encourage retailers to actively ask customers if they want to buy tickets. This approach is not foolproof, however, and it is no wonder that the vast majority of lottery retailers say they have lost more money than they have won.