The History of the Lottery

The lottery is a fixture in American society, with people spending upward of $100 billion on tickets each year. Its advocates promote it as a way to raise revenue for state governments, but that claim needs some scrutiny, particularly in light of the fact that lotteries make up a tiny share of overall state budgets. And, besides raising revenue, the lottery offers other, less-obvious benefits for society: The lottery may provide entertainment and social status, help discourage problem gambling, and give ordinary citizens access to the financial markets.

The casting of lots to decide matters has a long history in human culture, and public lotteries to award goods or money prizes have an even longer tradition. The first known lotteries were probably organized by Augustus Caesar for municipal repairs in Rome, and the first European lottery to offer money prizes (as opposed to articles of unequal value) was held in Bruges, Belgium, in 1466. Lotteries were also common in the colonial period, with Benjamin Franklin holding a lottery to fund the purchase of cannons for Philadelphia and George Washington promoting his “Mountain Road Lottery” in the Virginia Gazette.

By the 1970s, a number of innovations transformed the lottery industry. Instant games—such as scratch-off tickets—were introduced, giving players the chance to win a prize without waiting for a drawing weeks or months in the future. The popularity of these games fueled a rapid expansion in lottery operations, and revenues typically grew dramatically. Then, in many cases, they began to level off or decline, and the lottery operators responded by introducing new games—typically with lower prize amounts and higher winning odds—to maintain or increase revenues.

While the lottery has its critics, many of whom point to its potential for addiction and its regressive effects on lower-income groups, the truth is that the vast majority of states use it to finance vital services, such as education, health care, infrastructure, and social welfare programs. The key issue, in my view, is whether a government should be in the business of promoting vices such as gambling and alcohol, especially when those vices represent such a small fraction of state budgets.