Lottery is a hugely popular activity, with Americans spending over $100 billion each year on tickets. While the idea of determining fates and distribution of property by lot has a long history (see the Bible), modern lotteries are much more common as a method of raising money for public purposes. But even as the popularity of lotteries surges, there is still some confusion over how they work.
The word “lottery” is a shortened form of the Dutch noun lot, meaning fate or chance. It was a very old concept, and the first recorded lottery to offer prizes in the form of money dates back to the 15th century in cities such as Bruges and Ghent, where towns held lotteries to raise funds for town fortifications and help the poor.
In colonial America, lotteries were used to finance everything from the purchase of ships for the Virginia Company to paving streets and building churches. And while Puritans considered gambling dishonorable, it was well established—and often a source of irritation—in New England by the 1740s. The foundations of Harvard and Columbia were also financed by lotteries, as were many public works projects such as canals, bridges and roads, including a road to Canada during the French and Indian War.
By the late 1800s, however, the tide was turning against lotteries. This was partially due to moral and religious sensibilities, but corruption was also at play. Some lottery promoters were simply taking the winnings and absconding without giving out any prizes, making the game seem illegitimate.
Lotteries are now legal in all 50 states, with most of the prize money being devoted to education, though some state programs have more creative ways of using the money. For example, Minnesota puts about 25% of its lottery proceeds into an environment and natural resources fund to ensure water quality and wildlife regulations are met. The Pennsylvania Lottery, meanwhile, invests over a billion dollars in senior programs including free transportation and rent rebates.
One of the most fascinating aspects of lottery is that, once a state adopts it, others follow suit pretty quickly. “There’s a geographical pattern to where they spread,” says Matheson. “As soon as a state legalizes, the states around it tend to follow that.” This is what led to multi-state lotteries such as Powerball and Mega Millions.