Lottery, procedure for distributing something (usually money or prizes) among a group of people by lot or by chance. The type of lottery considered here is a form of gambling in which many people purchase chances, called lottery tickets, and the winning tickets are drawn from a pool composed of all tickets sold (sweepstakes) or offered for sale, or consisting of all of or most of the possible permutations of the numbers or symbols used on the tickets. The total value of the prizes is commonly the amount remaining after expenses—including the profits for the promoter, the costs of promotion, and the taxes or other revenues—have been deducted from the pool, though in some lotteries the number and value of prizes are predetermined and the profits for the promoter depend on the number of tickets sold. In most large-scale lotteries, a very large prize is offered along with many smaller ones. Lotteries have a very wide appeal as a means for raising money; they are simple to organize, easy to play, and popular with the general public.
The practice of determining the distribution of property by lot is traceable to ancient times. Among dozens of biblical examples is one in the Old Testament (Numbers 26:55–56) that has the Lord instructing Moses to take a census of the people of Israel and to divide the land among them by lot. Roman emperors such as Nero and Augustus used lotteries to give away property and slaves during Saturnalian feasts and other entertainments. A popular dinner entertainment in ancient Rome was the apophoreta (Greek: “that which is carried home”), in which the host distributed pieces of wood with symbols on them and then toward the end of the evening had a drawing for prizes that the guests took home. Modern lotteries of a similar type include those used for military conscription, commercial promotions in which property is given away by a random procedure, and the selection of jury members from lists of registered voters. Under the strict definition of a gambling type of lottery, however, payment of a consideration (property, work, or money) must be made for a chance of receiving the prize.
The first European lotteries in the modern sense of the word appeared in 15th-century Burgundy and Flanders with towns attempting to raise money to fortify defenses or aid the poor. Francis I of France permitted the establishment of lotteries for private and public profit in several cities between 1520 and 1539. Possibly the first European public lottery to award money prizes was the ventura, held from 1476 in the Italian city-state of Modena under the auspices of the ruling d’Este family (see House of Este). However, the lottery that came to serve as a model was the Genoa lottery. This was such a successful enterprise (in spite of resistance from the Roman Catholic Church) that the practice quickly spread to other Italian cities and elsewhere. When the Italian nation was united, its first national lottery was created in 1863, with regular (weekly) drawings organized for the purpose of providing income for the state. Lotto, the Italian National Lottery, is regarded as the basis for such modern gambling games as policy, the numbers game, keno, bingo, and lotto.
Queen Elizabeth I chartered a general lottery in England in 1566 to raise money for repairing harbours and other public purposes. In 1612 the Virginia Company obtained permission from King James I for a lottery to help in financing the settlement of Jamestown in the New World. While several lotteries organized by the company did not erase a desperate need for funds, and although businessmen in some English towns complained of difficulties related to them, lotteries were nevertheless thought to be the “first and most certaine” way to obtain funds. Lotteries accounted for almost half of the yearly income of the company by 1621, when, as a result of bitter dissension within the company itself, the company’s lotteries were finally prohibited by the House of Commons. In 1627 a series of lotteries were licensed to raise money for the building of an aqueduct for London, and, in fact, except for a ban from 1699 to 1709, lotteries were held in England until 1826.
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Some important problems developed in the manner of conducting lotteries in England in the 17th and 18th centuries. For most of that period, lotteries were the only form of organized gambling available to the people. They were intensively advertised by such promotions as torchlight processions in the streets. Contractors would often manage to purchase tickets at less than the standard prices for subsequent resale at excessive markups, and a type of side bet called insurance—a small wager that a ticket would or would not be drawn in the regular lottery—was popularized. The state could not derive revenues from either of the latter two practices, but dishonest private operators could. Also, it was claimed that lotteries encouraged mass gambling and that drawings were fraudulent. Their abuses strengthened the arguments of those in opposition to lotteries and weakened their defenders, but, before they were outlawed in 1826, the government and licensed promoters had used lotteries for all or portions of the financing of such projects as the building of the British Museum, the repair of bridges, and many projects in the American colonies, such as supplying a battery of guns for the defense of Philadelphia and rebuilding Faneuil Hall in Boston.
The Continental Congress in 1776 voted to establish a lottery to try to raise funds for the American Revolution. The scheme was abandoned, but, over the next 30 years, the practice continued of holding smaller public lotteries, which were seen as mechanisms for obtaining “voluntary taxes” and helped build several American colleges: Harvard, Dartmouth, Yale, King’s College (now Columbia), William and Mary, Union, and Brown. Privately organized lotteries also were common in England and the United States as means to sell products or properties for more money than could be obtained from a regular sale. By 1832 lotteries had become very popular indeed; the Boston Mercantile Journal reported that 420 had been held the previous year in eight states.
Abuses by private organizers continued, however, and once again voices of opposition began to dominate. In 1827 postmasters and their assistants were barred from selling lottery tickets. Most of the states began legislating antilottery laws. In 1868 Congress declared it unlawful to use the mail for letters or circulars concerning lotteries “or other similar enterprises on any pretext whatever.” The opinion of the Supreme Court in 1878 held lotteries to have “a demoralizing influence upon the people.”
The postal rules did not have an immediate effect in eliminating lotteries; the most successful lottery in the United States was organized in Louisiana in 1869 and ran continuously for 25 years. Agents for the Louisiana Lottery were located in every city in the United States: the total sales per month were $2,000,000 at its peak; monthly drawings generated prizes up to $250,000, and twice-yearly prizes could go as high as $600,000. In 1890 President Benjamin Harrison and Congress agreed in condemning lotteries as “swindling and demoralizing agencies” and prohibited the interstate transportation of lottery tickets. The Louisiana Lottery, the last state lottery in the United States until 1963, was killed, but not until it had acquired both enormous profits for its (private) promoters and a reputation for bribery and corruption.