The History of the Lottery
The lottery is a form of gambling in which people pay a small sum of money for a chance to win a large prize. The prizes may be cash or goods. Lotteries are generally organized so that a percentage of profits is donated to good causes. Many states have lotteries, and there are also private companies that organize them. Some lotteries are regulated by the government, while others are not. The lottery has become a major source of revenue for states, and the amount of money paid out in prizes is growing rapidly. This has raised concerns about the effects of the lottery on poorer people and problem gamblers. In addition, the promotional tactics used by lotteries can cause people to spend more than they can afford to lose.
The first recorded lotteries to offer tickets for sale with prizes in the form of money appeared in the Low Countries during the 15th century, although records from earlier towns indicate that they were already established by that time. The word “lottery” appears in English literature for the first time in 1569, and the first state lottery was established two years later.
A lottery has three basic components: a pool of prizes, a procedure for selecting winners, and a means for recording ticket purchases. A pool of prizes must be large enough to attract significant numbers of bettors, and the procedure for selecting winners must be sufficiently transparent and impartial that potential bettors can evaluate its fairness. Lotteries also have to manage the costs of organizing and promoting them, so some portion of the pool must be deducted as revenues and profits. Finally, a decision must be made about the balance between few large prizes and many smaller ones.
Most modern lotteries use computers to record a betor’s identification and the numbers or other symbols on which he has placed his stake. The computer then selects the winning numbers or symbols based on a random algorithm. A bettor can choose to participate in the drawing by buying a numbered receipt or a prepaid ticket. Some lotteries require the betor to choose his own number(s) or symbol(s). Others assign them. In the latter case, bettors often select family birthdays or other lucky numbers such as the number seven.
The history of state lotteries is typical of public policymaking: a legislative body establishes a monopoly for itself; hires a private firm to run the lottery, or creates its own public corporation; begins operations with a limited number of relatively simple games; and then, under pressure for revenue, progressively expands the operation by adding new games and increasing their complexity. The expansion has created its own set of problems, including criticisms that it contributes to the problem of compulsive gambling and a regressive impact on lower-income groups.
A key element of the lottery is its reliance on public funds. By “earmarking” lottery proceeds for a particular purpose, the legislature reduces the amount of appropriations that it would otherwise have to allocate to that purpose from its general fund. This practice has raised concerns about whether the legislature takes the lottery’s societal impacts into account when making funding decisions.