A lottery is a game in which numbers are drawn and the winning ticketholder receives a prize. There are many different kinds of lotteries, but they all share some common features: the state sets a prize pool; it legally establishes a monopoly for itself (as opposed to licensing a private firm in return for a cut of the profits); it begins operations with a modest number of relatively simple games; and it progressively expands the program in terms of prizes, the number of games, and promotional activities. In addition, most lotteries offer a large-scale grand prize, sometimes referred to as the jackpot, while others award smaller prizes that are based on the amount of money paid for tickets.
Despite longstanding ethical objections to gambling, lotteries were widely approved after World War II by states eager to raise funds. The new advocates dismissed the old arguments that lotteries encouraged people to gamble recklessly, pointing out that most participants were already gambling anyway. They also argued that the revenue from lotteries could help pay for services that states had previously had to levy more heavily on working-class and middle-class taxpayers, such as education.
The origin of lottery is obscure, but the word probably derives from the Dutch verb lot, meaning “fate.” By the fifteenth century, lotteries were widespread in the Low Countries, where towns held them to raise money for town fortifications and charity for the poor. The first European public lotteries to sell tickets for money prizes appeared in the sixteenth century, although some towns continued to draw lots for food and other goods into the seventeenth century.
In America, state-run lotteries began in the Northeast and Rust Belt, where voters were less worried about social safety nets and more inclined to subsidize government services with voluntary taxes. The nation’s tax revolt of the late-twentieth century accelerated after the war, when California passed Proposition 13, cutting property taxes by nearly sixty per cent and inspiring other states to follow suit.
Lotteries were a popular and profitable way for states to boost their bottom lines. In the early nineteenth century, they helped build Harvard, Dartmouth, Yale, Brown, King’s College (now Columbia), and William and Mary. The Continental Congress voted to hold a national lottery during the American Revolution, but it was eventually abandoned.
Some scholars have suggested that the popularity of lotteries in the United States and Britain is linked to the popularity of speculative investment in companies such as railroads, canals, mining, and banking. In the late nineteenth century, it was not uncommon for individuals to invest in a dozen or more stocks at once to reap substantial gains in a very short period of time. This practice was known as “assumptive” investing, and it was particularly popular among wealthy investors who could afford to lose a substantial sum of money. The risk of losing the money was supposedly offset by the chance to gain even more in the future through dividend payments.