The Early History of Lotteries
Lotteries have a long and storied history, dating back thousands of years. Some of the earliest records of lotteries come from Ancient China during the Han Dynasty, between 205 and 187 B.C. These lotteries were believed to have helped finance major government projects like the Great Wall of China. Other early examples include the lottery organized by Roman Emperor Augustus Caesar to raise funds for repairing the City of Rome.
In the Middle Ages, lotteries became popular in Europe as a way for governments to raise money without heavily taxing their citizens. King Francis I of France held several lotteries starting in the 1500s to help fund his military defenses. The English State Lottery was established in 1566 by Queen Elizabeth I to raise money for harbor fortifications. This lottery granted prizes of cash as well as plates and tapestries.
Lotteries Arrive in America
Lotteries gained popularity in the New World as well. In 1612, the Virginia Company held a lottery to fund the Jamestown settlement, considered the first English colony in America. Further lotteries provided funds and land tosettlers in the colonies. By the 1700s, lotteries funded colleges like Harvard, Yale, Columbia and Princeton. Lotteries even helped finance the construction of landmarks like Faneuil Hall in Boston.
Benjamin Franklin sponsored a lottery in 1746 to equip colonial troops for the French and Indian War. George Washington also supported lotteries, organizing several to fund projects in Virginia and his home at Mount Vernon. Lotteries continued to be used to fund public works projects into the early 19th century, until morality concerns over gambling led many states to ban authorized lotteries. From 1834 to 1859, all authorized lotteries were eliminated in every state but Delaware.
However, from 1863 to 1876, federal lotteries were used to raise money for the Union war effort during the Civil War. Winning one of these lotteries could exempt someone from military service, in return for a fee paid to hire a substitute draftee. This led to some unequal results, as only wealthier citizens could afford the fees to enter and win the lotteries. Public backlash eventually ended most federal lotteries as well. Lotteries remained dormant in the United States until 1964, when New Hampshire introduced the first modern government-run lottery to support education.
The Birth of Contemporary Lotteries
While illegal private lotteries and numbers games continued in many places around the country, it took until 1964 for a government-run lottery system to reemerge in the United States. That year, New Hampshire introduced the first modern lottery in America to support education in the state. Tickets cost $3 each and offered prizes up to $100,000. New York followed in 1967, and then New Jersey in 1970. By 1973, seven other states joined in establishing public lotteries. Today, 45 states, plus Washington, D.C., Puerto Rico and the U.S. Virgin Islands offer government-run lotteries. Here is a timeline of the expansion of contemporary U.S. lotteries:
| Year | State |
|---|---|
| 1964 | New Hampshire |
| 1967 | New York |
| 1970 | New Jersey |
| 1971 | Connecticut, Massachusetts |
| 1972 | Michigan, Pennsylvania |
| 1973 | Arizona, Maine, Maryland, New Mexico, Ohio, Rhode Island |
| 1974 | California, Delaware, Illinois, Indiana, Missouri, Montana, New Hampshire, New Jersey, New York, North Dakota, Pennsylvania, Rhode Island, Vermont, Washington |
| 1975 | Connecticut, Massachusetts, Michigan, New Jersey, Ohio, Pennsylvania |
| 1976 | Louisiana |
| 1978 | Idaho |
| 1980 | Connecticut, Delaware, Illinois, Iowa, Kansas, Kentucky, Maine, Maryland, Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New York, North Dakota, Ohio, Pennsylvania, Rhode Island, Vermont, Washington, West Virginia, Wisconsin |
| 1981 | Oregon |
| 1982 | Arizona, District of Columbia, Florida, Massachusetts, Montana, New Mexico, South Dakota |
| 1983 | Kentucky, Rhode Island |
| 1984 | California, Indiana, Missouri, New Hampshire, New Jersey, Ohio, Pennsylvania, Washington, West Virginia |
| 1985 | Delaware, Kansas, Maine, Michigan, Oregon |
| 1986 | Connecticut, Illinois, Iowa, Minnesota, New York, Wisconsin |
| 1987 | Nebraska, New Mexico, South Dakota |
| 1988 | Colorado, District of Columbia, Idaho, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Michigan, Minnesota, Missouri, Montana, Rhode Island |
| 1989 | Oregon, Pennsylvania, South Dakota, Vermont, Washington, West Virginia |
| 1990 | Arizona, Delaware, Louisiana, Missouri, New Jersey, Ohio |
| 1991 | California, Connecticut, Illinois, Massachusetts, Michigan, New Hampshire, New York, North Dakota, Virginia |
| 1993 | Texas |
| 2002 | Tennessee |
| 2012 | Wyoming |
As the table shows, the reintroduction of lotteries to American life was a gradual process, expanding state by state across the country over five decades. In the beginning, states were cautious, wanting to prevent fraud and maintain public faith in the fairness of the lotteries. Systems for accounting and public oversight were implemented. Digital technology and equipment like randomized number generators allowed larger and more complicated lotteries to take place in more recent times.
Lottery Games Evolution
While lottery games initially started with simple raffle-style drawings, today there exists an immense variety of lottery games and ways to play. Some of the major developments in lottery games include:
Passive Lottery Games
Early lottery games were passive, meaning players did not choose their numbers but were assigned tickets with number combinations at random. Players didn’t have to make any decisions to play, simply buying a ticket and awaiting the results. Passive games are still common today, like raffle tickets and scratch-offs where number combinations are pre-determined and assigned to players randomly.
Daily Numbers Games
As technology allowed, many lottery providers introduced daily drawings, where players could select their numbers and tickets were then valid for that day’s drawing. Games like Pick 3 and Pick 4 allow players to choose numbers, add up to seven draws, then await the drawings each day. This gave players more control over how they played compared to passive lotteries.
Lotto Games
Beginning in the late 1970s and early 1980s, lotteries introducedLotto games, where players choose six or more numbers from a larger field. The lottery draws six or more numbers at random, and players match their selections to win prizes. These games quickly became popular for their huge jackpots. Lotto started with 6/49 games (six numbers from 1-49). The field expanded to larger matrices like 5/75 or 6/59 to further grow potential prizes.
Multistate Lotteries
In 1985, Lotto America became the first multistate lottery, combining participating state populations to offer greater jackpot potential. Players matched six numbers from a field of 54. After Lotto America ended in 1992, Powerball launched as the new multistate lottery in 1992. Mega Millions began in 1996 as the Big Game before adopting its current name in 2002. These massive multistate games boosted jackpot sizes into hundreds of millions.
Instant Win and Scratch Off Games
Beginning in 1974, Massachusetts introduced the first instant win scratch card lottery game. These tickets could be purchased for low prices, then scratched off to immediately reveal prizes. No drawing was required. The instant gratification of scratch games made them an immediate hit. Today, scratch tickets are the highest-selling lottery games in the U.S., accounting for nearly 75 percent of domestic lottery sales.
Video Lottery Terminals
Video lottery terminals, or VLTs, combine electronic gaming with lottery elements. Introduced in 1992, VLTs function similarly to slot machines, but connect in a network to a centralized lottery system. Players insert money and play electronic games at a terminal. The lottery software determines winners. Revenue is split between location owners and the controlling lottery jurisdiction.
Internet Lottery Games
More recently, lotteries have expanded online and onto mobile devices. Internet gaming opens lotteries to new demographics and allows for more convenience buying tickets and checking results. Currently, a majority of states restrict lottery ticket sales to in-person only. However, expanded legislation in some places now allows for subscription plans, betting and even direct ticket purchases via internet lotteries. This innovation will likely grow in the coming years.
Lottery Funding and Beneficiaries
One of the biggest factors in the return and expansion of government-run lotteries was the benefit of revenue without tax hikes. Money raised from lottery sales could fund a variety of public programs. Here is how these revenues are commonly used:
Education Funding
A vast majority of lottery revenues go toward educational programs. All programs fund public schools K-12. Some examples:
- Georgia’s HOPE Scholarship funded by its lottery provides free public college tuition for in-state students maintaining a 3.0 GPA. Over $10 billion in scholarships have been distributed since 1993.
- The Florida Lottery has contributed over $45 billion to education since 1988, primarily through its Bright Futures program for merit-based college scholarships.
- The California Lottery provides over $1 billion annually to public schools, representing around 1-2% of state education budgets.
- The Michigan Lottery has granted over $27 billion to education since 1972.
General Government Revenue
While education is the most common beneficiary, lotteries also contribute general budget revenue for state governments.
- The New York Lottery has generated over $78 billion for government programs since 1967.
- The Pennsylvania Lottery produces over $1 billion annually for programs that benefit older residents.
- The Hoosier Lottery in Indiana contributes over $300 million yearly to the Build Indiana Fund supporting local infrastructure projects.
Specifically Earmarked Programs
Some lotteries earmark proceeds for very specific causes:
- The Oregon Lottery dedicates over 90% of profits to environmental and public outdoor areas.
- The Arkansas Scholarship Lottery funds college scholarships and grants based on academic merit and financial need.
- The Connecticut Lottery designates funds to combat problem gambling programs.
Since their reestablishment in the 1960s, state lotteries have generated over a trillion dollars for public causes across the United States. While no lottery achieves full funding of any program, this supplemental revenue remains vital. Lotteries will likely continue growing in the future, leading to ongoing innovations and evolutions in games available.
Conclusion
From Ancient times up through today, lotteries have had a long, fascinating history. For centuries, they have raised money for anything from building projects to war efforts. While suppressed in the United States for decades, the return of government lotteries in the 1960s again made this form of gambling entertainment a fixture in society. With continual development of new games and formats, lotteries seem poised to continue adapting to serve various public finance needs well into the future.
