The Origins of Lotteries
Lotteries have a long and interesting history dating back thousands of years. Early forms of lotteries were used in Ancient China to help fund major government projects like the Great Wall. There are also records of lottery-like games being played in Ancient Rome.
The first recorded official lotteries to offer tickets for sale took place in the Low Countries in the 15th century. In 1465, the widow of the Flemish town of L’Ecluse held a raffle to raise money for the town and its fortifications. This is one of the earliest verifiable lotteries in recorded history.
The Birth of Modern Lotteries
It wasn’t until the 17th century that lotteries as we know them today really started to take shape. In 1612, the English State Lottery was established by King James I to help raise funds for the colonization of the New World. This lottery offered cash prizes and tickets were relatively inexpensive, allowing poor citizens to participate.
The English State Lottery ran intermittently for nearly 300 years, alternating between periods of operation and no operation. This lottery paved the way for similar government-run lotteries used to fund public works projects or wartime efforts in other countries.
Lotteries in Colonial America
When European settlers came to Colonial America, they brought lottery traditions with them from their native countries. Soon several colonies were running their own lotteries to help fund the new infrastructure and institutions needed in the colonies.
The first recorded lottery in America took place in 1612 in the Jamestown colony of Virginia. It was approved by King James I and was designed to help raise funds to support the venture.
In 1744, the colonies of Rhode Island, Connecticut and Massachusetts used a lottery to help fund an invasion of Canada during King George’s War. Lotteries funded by the individual colonies continued until the Revolutionary War.
The Early United States Lotteries
After American independence, lotteries continued to be used by states as a way to raise revenue without levying burdensome taxes. Alexander Hamilton, Secretary of Treasury under President Washington, saw state-sponsored lotteries as a way to help fund public improvement projects and unify the new states.
In 1787, the Continental Congress used a lottery to help sell bonds to help build up the young country’s economy. George Washington himself purchased the first ticket for $10. Other notable early participants in government lotteries were Thomas Jefferson and Benjamin Franklin.
Between 1747 and 1857 alone, over 400 lotteries were sanctioned by states to help finance roads, libraries, churches, colleges, canals and bridges. Harvard, Yale, Princeton, Columbia, Dartmouth, and the University of Pennsylvania all benefited early on from lottery proceeds.
Corruption and Bans on Lotteries
As lotteries grew in popularity in the early 19th century, there was growing opposition to the practice. Religious leaders condemned gambling, questioning its morality. Political reformers argued lotteries were a facilitator of crime and fraud. Suspicions also arose that lottery managers were pocketing funds instead of directing profits towards their intended public works projects.
This corruption and fraud led states to begin outlawing lotteries. New York became the first state to put in place a constitutional ban on lotteries in the 1840s. By 1894, lottery activity was made illegal in every state except Louisiana.
Congress also enacted bans against sending lottery materials through the mail, effectively ending the possibility of interstate lotteries. Lotteries remained banned throughout most of the country for over 60 years.
State Lottery Revivals
State-run lotteries finally made a comeback in 1964 when New Hampshire introduced the nation’s first modern state lottery. Buoyed by its success, other states followed suit once they saw the extra revenue lotteries could generate.
By 1973, 15 states had created lottery systems. Today, there are 45 state lotteries; 44 states plus Washington D.C. allow lotteries in some form. Only Alabama, Alaska, Hawaii, Nevada and Utah do not have any government-run lotteries at this time.
The Birth of Powerball
As lotteries returned, states sought ways to offer bigger jackpots that would attract more players. This led to the idea of multi-state games. The first multi-state lottery was the Tri-State Lotto, formed in 1985 by Maine, New Hampshire and Vermont. A year later, the Multi-State Lottery Association (MUSL) was formed with Iowa, Kansas, Missouri, Oregon, Rhode Island, West Virginia, and the District of Columbia as its charter members.
In 1987, MUSL introduced America’s first multi-state progressive jackpot game, Lotto America. A few years later in 1992, Lotto America was revamped and renamed Powerball. Over the next three decades, Powerball became the most widely played lottery game in the country. At its peak, Powerball counted 44 state lotteries as participants. Huge jackpots in excess of half a billion dollars became common, with a record $1.58 billion jackpot split by three tickets in January 2016.
Online Lottery Ticket Sales
In recent decades, technology has impacted the lottery industry as well. Beginning in 2002, states began experimenting with selling lottery subscriptions and tickets online. This made playing the lottery more convenient than ever before. Some states such as Georgia, Illinois and Kentucky also allowed customers to play their state lottery games online.
In 2011, Minnesota became the first state to offer an app allowing lottery players to check results and scan tickets on their smartphones. Other states later followed suit as mobile use grew. Apps offered added convenience for lottery players. Betting online opened lotteries up to new demographics as well. Today, most state lotteries offer subscription services and ticket sales online or through mobile apps in addition to retail sale locations.
The Rise of Scratch-Off Tickets
A significant innovation in the evolution of lottery games was the invention of the scratchcard. Commonly called scratch-offs, these tickets offer instant gratification compared to waiting for periodic drawing results. The Massachusetts lottery introduced a scratchcard game in 1974, the first of its kind.
Today, scratchcards have surpassed traditional drawing games to become the top-selling type of lottery ticket. Approximately 75% of all US lottery revenue now comes from scratchcard sales. Their ability to provide instant feedback helps drive this popularity.
Some key events related to the rise of scratch-off tickets:
- 1974 – Massachusetts introduces first scratchcard.
- 1987 – California becomes the first state to introduce a $1 scratch-off game.
- 1995 – The $2 scratchcard price point debuts.
- 1999 – $3 scratch game introduced in California.
- 2004 – $20 scratch ticket introduced.
- 2012 – 75% of US lottery sales come from scratchcards.
Scratchcards continue to break new price barriers that give players chances at bigger prizes. Today most state lotteries offer everything from $1 to $50 scratchcard games.
Video Lottery Terminals
A more recent lottery innovation are video lottery terminals, or VLTs. These machines are similar to slot machines but offer lottery drawing games in an electronic format. Delaware was the first state to launch video lottery games in the mid-1990s. Today, VLTs are permitted in just a handful of states, but generate sizable revenues where allowed. In Maryland, for instance, video lottery terminals account for about 35-40% of all state lottery revenue.
Third-Party Lottery Couriers
The rise of online shopping and on-demand services has also had an impact on lotteries in the digital age. Third-party courier services emerged that allowed players to buy lottery tickets online through licensed retailers in lottery states. This gave consumers a convenient means to play state lottery games remotely.
Some top online lottery courier services today include:
- Jackpocket
- Lotto Courier
- Lottery Messenger
These companies purchase tickets from brick-and-mortar retailers on behalf of consumers for a fee and scan and upload the tickets to customer accounts. Winners can also cash any prize money remotely through the service. This offers a legal alternative to playing out of state or internationally online.
Advantages of Lotteries
Throughout their long history, lotteries have continued to endure because they can provide some key benefits:
- They offer a relatively painless way to raise funds for public programs and institutions.
- Lotteries give players the excitement of a chance to win big jackpots.
- Buying lottery tickets is voluntary unlike other forms of taxation.
- Modern lottery operations provide funding for retailers and small businesses who sell tickets.
- Jackpots allow lotteries to donate sizable sums to educational, environmental and other laudable causes.
When operated transparently and regulated properly, lotteries can be an ethical way for states to raise revenues while providing entertainment.
Criticisms of Lotteries
There are some criticisms often levied against state-run lottery systems as well:
- Lotteries essentially function as a regressive tax disproportionately impacting the poor.
- They can be addictive, leading problem gamblers into financial ruin.
- Some argue lotteries allow states to avoid making needed tax reforms or budget cuts.
- Advertising emphasizing life-changing jackpots is accused of giving false hope.
- A few critics believe any form of gambling is immoral.
There are also debates about whether lottery revenue always funds public causes as intended. While supporting education is a common goal, some state budgets have diverted this revenue to other needs.
The Global Lottery Industry Today
While lotteries remain most popular in the United States, they have expanded globally as well. Some facts about the size of today’s lottery industry include:
- Global lottery sales totaled $302.5 billion in 2017.
- The largest single global lottery is the Chinese Welfare Lottery with 2017 sales of $35 billion.
- The average American adult spends $312 annually on lottery tickets.
- Lottery sales account for about 1% of all U.S. consumer spending.
- Over 6 million retail businesses worldwide offer lottery games.
Some of the biggest international lottery games are Eurojackpot, EuroMillions and the Italian SuperEnalotto. Lottery fever has spread from the earliest recorded histories to every corner of the globe today.
Key Moments in Lottery History
| Year | Event |
|---|---|
| 205 BC | Han Dynasty in Ancient China holds first known lottery to fund government projects |
| 1465 | First recorded public lottery held in L’Ecluse, France |
| 1567 | First English state lottery holds drawing |
| 1744 | Colonial lotteries fund invasion of Canada in King George’s War |
| 1776 | First Continental Congress lottery to finance Revolutionary War |
| 1833 | Pennsylvania bans lotteries |
| 1863 | All states apart from Delaware, Missouri and Kentucky ban lotteries |
| 1964 | New Hampshire becomes first state to start modern lottery |
| 1985 | Tri-State Lotto links Maine, New Hampshire and Vermont |
| 1988 | Powerball begins in America |
| 2002 | States begin selling lottery tickets online |
| 2011 | Minnesota offers first lottery ticket scanning app |
| 2015 | Record $1.58 billion Powerball jackpot won |
Famous Lottery Winners
While most lottery players win small amounts if anything, a lucky few have claimed truly life-changing jackpots over the years:
- Cynthia Stafford – Won $112 million in California in 2007. Used money to fund charity projects.
- Shane Missler – 20-year old won $451 million Mega Millions jackpot in 2018.
- West Robinson – Vietnam vet won a $315 million Powerball jackpot in 2009.
- Evelyn Adams – Won the New Jersey lottery twice, in 1985 and 1986 for $5.4 million total.
- Francois Mevergnies – Belgian lottery participant won jackpots of $9.5 million and $6.83 million within 3 years.
- “Ocean’s 16” – Group of 16 co-workers split $437 million Mega Millions jackpot in 2019.
For the handful who beat the astronomical odds, winning the lottery can mean life-changing wealth and opportunity. Most winners choose lump sum payouts and immediately quit jobs to start living in luxury. Record jackpots over $1 billion virtually guarantee multigenerational wealth. However, cautionary tales about big winners who go bankrupt also abound. Money management skills and avoiding a lavish lifestyle remain essential.
Famous Lottery Scandals
While lotteries have raised billions for public causes over the years, some controversies and scandals have also plagued the industry:
- Triple Six Fix – Rigging of Pennsylvania lottery in 1980s by lottery insider Nick Perry.
- Hot Lotto Fraud – Eddie Tipton scammed 2005 Iowa lottery for $14 million as an employee.
- Milan Vukelic – Croatian man rigged state lottery for $1.2 million in 1981.
- Philippine Lottery Scandal – President accused of abusing funds in illegal lottery in 2007.
- Greece Corruption – Government officials rigged state lottery in 1992.
- China Fraud – Director of welfare lottery stole $10 million in lottery funds in early 2000s.
Such scandals have fueled critics claims that lottery revenues do not always benefit the public good as intended. Oversight and transparency reforms have helped, but occasional controversies persist.
Conclusion
Tracing their origins back thousands of years, lotteries have exhibited remarkable longevity throughout history. They have evolved from crude wagers into modern sophisticated operations driving billions in economic activity.
Scandals and bans have arisen periodically. But in cultures where gambling is accepted, lotteries channel the desire to take a chance at a life-changing fortune into a relatively harmless means of entertainment. For these reasons, lotteries in some form seem likely persist as a lucrative venture for both the state and the individual.
