The History of the Lottery


In a lottery, prizes are awarded to the holders of tickets drawn at random. They can be anything, from a small sliver of hope to an expensive home or automobile. Lotteries are usually organized by state governments to raise money for public works, or as a way for private citizens to win big.

The concept of a lottery is ancient, and early examples can be found in the writings of the Romans (Nero was a fan) and of Christians, who used the casting of lots for everything from choosing the next emperor to deciding whether or not Jesus’ clothes would keep him warm after his Crucifixion. In the twentieth century, lottery participation grew in popularity as a way of financing government projects and helping people escape from poverty.

Lotteries are regulated by state laws, and are administered by a state’s lottery commission or board, who selects and trains retailers, sells tickets, redeems winning tickets, pays high-tier prizes, and enforces lottery law and rules. State-run lotteries are popular in many countries. In addition to raising funds for government projects, they can also be used to fund schools and colleges, promote tourism, and provide other social services.

The modern lottery began to grow in popularity during the nineteen-seventies and eighties, as a growing awareness of the enormous profits to be made in gambling collided with a crisis in state funding. With unemployment, health-care costs, and inflation rising, state governments were struggling to balance their budgets without increasing taxes or cutting services. This, along with a growing sense of entitlement among Americans, led to a national obsession with unimaginable wealth that included dreams of hitting a multimillion-dollar jackpot.

Cohen argues that, at the same time, lottery advocates began to shift the emphasis of their arguments from moral concerns about gambling to the economic benefits of it. They argued that, since gambling was going to happen anyway, state officials should simply take advantage of it. This logic, while flawed, gave ethical cover to people who supported the lottery by arguing that its profits would pay for needed social services that a state otherwise couldn’t afford.

In the nineteen-sixties, a wave of states began running lotteries to raise money for things like schools and highways. As the decade progressed, lottery profits soared to record levels. State-run lotteries became a major source of revenue in America, and the moral concerns about them receded.

Lottery purchases can’t be explained by decision models that use expected value maximization, because the purchase of a ticket entails more cost than the potential prize. But more general models that use utility functions based on things other than the lottery can explain them. In particular, those who are more risk averse will tend to buy fewer tickets, and those who make less money will spend a greater percentage of their incomes on them.