The History of the Lottery

A lot of people play the lottery, contributing billions to state budgets every year. In the United States, where it was first introduced, 60% of adults report playing at least once a year.1

Lotteries are generally popular because they allow people to win big sums of money, even if the chances of winning are low. For this reason, many people consider playing them to be a form of gambling. However, the fact that a person can win huge sums of money with the purchase of a ticket does not make the transaction irrational if the entertainment value (and other non-monetary benefits) outweigh the negative utility of a monetary loss.

In the early modern period, lotteries helped finance large public projects, from building the Great Wall to repairing bridges and supplying a battery of guns to defend Philadelphia from the British. In Europe, lotteries became part of the fabric of life, and despite strong Protestant proscriptions against gambling, they were widely used in the American colonies.

Most of these early lotteries were essentially traditional raffles in which the public bought tickets for a drawing that would take place at some future date, often weeks or months away. New innovations, starting in the 1970s, changed this paradigm, with a host of new games that offered instant gratification to players. These innovations also reshaped the way that lotteries were promoted, as revenues initially expanded quickly and then plateaued or began to decline.

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