The History of the Lottery

The lottery is a form of gambling where people purchase tickets with a random chance of winning a prize. The prizes may be money or goods and services. The odds of winning a lottery prize depend on the number and value of tickets sold. Most lotteries offer a large main prize and several smaller prizes, and the prize amount depends on the total value of the ticket pool after expenses, profits for the promoter, and taxes or other revenues have been deducted. Purchasing a lottery ticket can be an optimal decision for some individuals, if the entertainment or other non-monetary value of the purchase outweighs the disutility of the monetary loss.

In colonial America, lotteries were a common way to raise funds for private and public ventures such as roads, canals, libraries, schools, churches, colleges, and even for the war effort. Benjamin Franklin used a lottery to raise funds for cannons to defend Philadelphia during the American Revolution.

State governments promote the lottery by stressing its virtue as a source of “painless” revenue—that is, one that does not require tax increases or cuts in government services. This is a particularly appealing argument in the context of an anti-tax era, but studies have shown that the objective fiscal condition of a state does not influence its adoption of a lottery. Rather, the adoption of a lottery seems to be motivated by voters’ desire to have more government spending and politicians’ desire for a new source of profit from an activity from which they would benefit.