A History of American Lottery Laws

Lotteries are a form of gambling that offers participants the chance to win a prize by drawing numbers. They have been around for centuries, and are a common source of public funding for everything from roads to college scholarships. In the United States, state lotteries have become a major source of revenue. But as Cohen demonstrates in this spirited history, the lottery has not always served the public well.

From its earliest days, lotteries have been tangled up with slavery, sometimes in unpredictable ways. (In the eighteenth century, George Washington managed a Virginia lottery that offered human beings as prizes; and one formerly enslaved man, Denmark Vesey, won a South Carolina lottery and went on to foment a slave rebellion.) Early American lotteries were also linked to a variety of other types of gambling, from raffles and prizefighting to apophoreta dinners where guests would distribute pieces of wood with symbols and then draw for a series of prizes that they could take home.

In the late eighteenth and nineteenth centuries, when America’s prosperity began to wane, lottery revenue became increasingly important to many states, especially those with generous social safety nets. But there were rumblings of trouble ahead, as many people became aware that the prize money was not quite keeping pace with the costs of running government. At the same time, there was a growing perception that lotteries were unfair and corrupt and that state officials were using the proceeds for questionable purposes.

A solution was needed, and that solution came in the form of the modern state lottery. The first official state lottery was established in New Hampshire in 1964, and the first public lotteries in America were held soon afterward. They spread rapidly, even in the tax-averse states of the Northeast and Rust Belt.

The lottery’s popularity was fueled, in large part, by the promise that the profits from it would be used for a public good, such as education. This argument proved powerful, and is still used to convince voters to approve lottery laws. But studies show that the objective financial circumstances of a state do not seem to have much bearing on whether or when it adopts a lottery.

Lottery critics say that state governments do not use the proceeds for the purposes they claim, and that the games are often used as a smokescreen for higher taxes or cuts in other services. They point out that state lotteries often rely on super-sized jackpots to drive ticket sales, and that such high jackpots can be misleading as they are frequently advertised in terms of their lifetime payments (which are paid in equal annual installments over 20 years, with inflation and taxes dramatically eroding the value).

In addition, state lottery ads are often misleading in their presentation of odds and the probability of winning, and tend to appeal to irrational and risk-taking behavioral patterns. Finally, state lottery officials are insulated from oversight by the fact that their agencies are usually part of a larger executive branch and are staffed with political appointees who are not accountable to the legislative branch.