The History of the Lottery

The lottery is a game wherein a person pays a small sum of money (in the form of a ticket) for the chance to win a large amount of prize money. Americans spend over $80 Billion on lotteries each year. The odds of winning are very low, but people continue to play because of the dream of becoming rich. Nevertheless, this behavior is not financially sound and can lead to huge debts in the long run.

Despite their popularity, lottery tickets have been the source of controversy for years. Many people argue that lotteries are a hidden tax, whereby the state takes a portion of the winnings for itself. Others argue that lottery proceeds help fund public services such as education. However, the reality is that a large portion of the money ends up in the hands of the winners, who often end up bankrupt after only a few years of winning.

In the 17th century, the Continental Congress used a lottery to raise funds for the Colonial Army. Alexander Hamilton wrote that lotteries should be kept simple, and that “everybody will be willing to hazard a trifling sum for the opportunity of gaining a considerable gain.” Public lotteries were also popular in England and the American colonies, helping build Harvard, Dartmouth, Yale, King’s College (now Columbia), and other colleges.

By the late twentieth century, Cohen writes, our obsession with the lottery “corresponded precisely to a decline in financial security for most working people.” As income inequality widened and health-care costs rose, pensions and job security declined, and our longstanding national promise that children would grow up better off than their parents had been eroded, countless Americans turned to the lottery to make it possible to fulfill their dreams of unimaginable wealth.

The success of the lottery as a form of revenue generation was due in part to its popularity and in part to the fact that state governments were desperate for new sources of funding. The states, which were not accustomed to raising taxes, saw lotteries as a way of bringing in hundreds of millions of dollars without arousing the public’s suspicions that they were being double-taxed.

Until the 1970s, when innovation transformed the industry, most lotteries were simply traditional raffles in which people bought tickets for a drawing that could take place weeks or months in the future. In contrast, the new games offered a chance to win instant cash. While initial revenues expanded dramatically, they soon began to level off and even decline. The need to maintain or increase revenue meant that the lotteries were constantly introduced with new games.