A game or system for the distribution of prizes by chance, in which tickets are sold and a drawing is made to determine the winners. Prizes may range from money to goods or services. Traditionally, lotteries have been conducted by governments and public charities to raise funds for specific projects. Private lotteries are also common. Generally, the organizers of the lottery will deduct the costs of promotion and the profits for themselves from the pool of prize money, which is then awarded to the winners.
Lottery is a common way of raising money for public projects such as road construction and schools, but it can also be a form of gambling. In the latter case, the lottery participants pay a small amount of money in return for the opportunity to win a larger sum. In the United States, lotteries are regulated by state laws. A government-sponsored lottery is often called a public benefit lottery. The word is probably derived from the Middle Dutch noun loterie or the Latin term loteria, both meaning “action of drawing lots.” Early European lottery games usually included only one or two major prizes. Modern lotteries often feature multiple prizes of lesser value.
In the seventeenth century, lottery games became popular in Europe, and King Charles I of England organized his country’s first state lottery to help finance the royal army. He modeled it on the Italian lotto, which had become famous for its wide variety of prizes.
By the nineteen-sixties, growing awareness of all the money to be made in the gambling business collided with a crisis in state funding. As population and inflation rose, pensions and social security benefits began to erode, job-security costs climbed, health-care expenses soared, and poverty and unemployment rates grew, many state legislators found it impossible to balance the budget without either hiking taxes or cutting public services, both of which were likely to be punished at the polls.
For legislators, lotteries looked like a miracle solution. In a cost-benefit analysis, they could argue that the state would get millions in revenue from lottery ticket sales without having to raise taxes or cut services. And, since people were going to gamble anyway, it made sense for the state to cash in on their gambling addictions.
But the problem was that lottery sales were highly responsive to economic fluctuations. When incomes fell, unemployment rose, and poverty rates soared, so did lottery sales. Moreover, as with most commercial products, lottery advertising targeted poor and minority neighborhoods.
This, along with the fact that many poor and working-class families spent more of their income on tickets than did the wealthy—one per cent of those earning more than fifty thousand dollars a year spent on average a quarter of a percent of their annual income on tickets compared to thirteen per cent of those making less than thirty thousand dollars—made lottery opponents squeamish. They pushed back, insisting that a vote for the lottery was not a vote for gambling, but for a specific government service, invariably education but sometimes elder care or public parks.