A lottery is a process of distributing something such as prizes or money among a group of people by drawing lots or by chance. A lottery is a form of gambling in which many people buy opportunities called lottery tickets. The winning tickets are drawn from a pool consisting of all tickets sold or offered for sale. It consists of all or most possible permutations of the symbols or numbers used on the banknotes.
The total value of the prizes is usually the amount remaining after expenses. Expenses include profits to the promoter and promotion costs, taxes, and other income. All these expenses are deducted from the prize pool. The history of lotteries can be found back in the Chinese Han Dynasty between 205 and 187 BC.
Classical History of Lotteries
The earliest recorded signs of a lottery are keno receipts of the Chinese Han Dynasty between 205 and 187 BC. These lotteries helped to fund major government projects like the Great Wall of China. The Chinese Book of Songs, from the second millennium BC, gives a reference to a game of chance such as the wooden drawing. The context appears as a drawing of lots, referring to lotteries.
During the Roman Empire, the first known European lotteries were held mainly for dinner. Each guest would receive a ticket and the prizes would often consist of novelty items such as tableware. All the ticket holders were sure that they will win something. However, this type of lottery was nothing but a way of distribution of gifts by wealthy nobles during the Saturnalia festivities.
The earliest records of the lottery tickets for sale were organized by the Roman Emperor Augustus. It was a way of raising the funds for the repairs in the city of Rome. On the other hand, the winners received prizes in the form of items that were of unequal value.
The first registered lotteries offering tickets for sale with prizes in the form of money were held in the Netherlands in the 15th Century. Several cities have organized public lotteries to raise money for the city’s fortifications and help the poor. The city archives of Ghent, Bruges, and Utrecht indicate that the lotteries might be even older.
A record dated May 9, 1445, in L’Ecluse refers to the raising funds to build city walls and fortifications with 4,304 lottery tickets and a total cash prize of 1,737 florins. In the 17th century, it was quite common in the Netherlands to organize lotteries to raise money for a wide range of public uses and to help poor people. Lotteries have proven to be popular and have been hailed as a painless form of taxation.
The Staatsloterij, owned by the Dutch state is the oldest operating lottery. The English word lottery is derived from the Dutch noun lot which means fate. On the other hand, the first registered Italian lottery took place on January 9, 1449, in Milan. It was organized by the Ambrosian Golden Republic to finance the war against the Republic of Venice. However, Lotto in Genoa became very popular.
People used to bet on the names of the members of the Grand Council. Out of ninety, five candidates won the lottery in six months. This type of game was called Semenaiu or Lotto. Modern Lotto was born when people wanted to play more than twice a year. Hence, they began to substitute the numbers for the names of the candidates. As a result, model legal lotteries and illegal numbers games can date back to their ancestors.
The United States 1612 – 1900
An English lottery, authorized by King Hames I in 1612, gave the Virginia Company of London. It was to raise the funds to help establish settlers in the first permanent English colony in Jamestown Virginia. Lotteries in colonial America played an important role in financing private and public enterprises. Between 1744 and 1776, more than 200 lotteries were authorized to fund the bridges, canals, schools, churches, libraries, roads, etc.
In the 1740s, the founding of Columbia and Princeton Universities were funded by the lotteries. Also, the University of Pennsylvania was funded by the Academy Lottery in 1755. During the Indian and French Wars, various colonies used lotteries to fund their local militias and fortifications. In May 1758, The Commonwealth of Massachusetts raised funds through a lottery for Expedition Against Canada.
Benjamin Franklin defended Philadelphia by buying cannons from the lottery funds. Lotteries offered prizes in the form of Pieces of Eight. In 1768, the lottery of George Washington’s Mountain Road failed but later they became collectibles. In 2007, one copy was sold for $15,000. In 1769, Slave Lottery was headed by the Director of Colonel Bernard Moore, that advertised slaves and lands as prizes in the Virginia Gazette.
War of Independence
At the start of the War of Independence, the Continental Congress raised funds to support the colonial army through lotteries. Alexander Hamilton wrote that the lotteries should be simple and everyone should be willing to risk a negligible amount for a big win. In all these years, taxes were never preferred as fundraising. As a result, people started thinking of lotteries as a hidden tax.
At the end of the War of Independence, various states had to raise funds for many public projects through lotteries.
The precursor to legal lotteries was the 19th-century underground numbers game. It was operated in the policy shops where bettors had to choose the numbers. In 1875, a report from the committee of the New York State Assembly stated that the worst, meanest and lowest form of gambling takes place in New York known as the game of politics.
The game was also popular in the Italian neighborhoods known as the Italian lottery. In the Cuban communities, it was known as Bolita, meaning little ball. In the early 1900s, the game was associated with poor communities and could be played with just $0.01. It was the best opportunity for the working-class and low-income public to win large amounts of money. On the other hand, the policy winners were able to do tax evasions.
Now lotteries are administrated at the state level in the United States. 44 states and 3 territories operate the state lotteries and all of them are members of consortia. It runs regional games and two quasi-national games named Mega Millions and Powerball. In 1934, the first modern and American government-run lottery was established in Puerto Rico.
In 2018, Ohio became the first state to offer a digital lottery option to the people. Linq3 developed a technology, which helped people to play online lottery games by using their smartphones.
Lotteries – A Source Of Funds
Lotteries date back to the Chinese Han Dynasty, which raised funds using a game, now known as the lottery, to fund the government projects such as the Great Wall of China. Later on, lotteries have been used as a source of fundraising. These funds were used for fortification, development, settlement, defense, military training, and support, etc.
Instead of tax collection, lotteries were used to raise the funds for any purpose. This practice was popular in every Empire and Civilization, that people started thinking of lotteries as a hidden tax.