The History of the Lottery in America


A lottery is a game in which people pay to chance to win money or other prizes. The winner is chosen by drawing numbers or picking combinations of letters, with each entry costing the player a small fraction of a dollar. It is a form of gambling that has become popular in many countries. Some lotteries are organized by state governments, while others are privately run. The most popular form of lottery is the cash prize, but there are also a number of other types, including those that offer apartments, school placements, or even subsidized housing units.

In his new book, David Cohen examines the history of the lottery in America, and he makes one clear point: Lotteries aren’t just about money; they’re about addiction. “Lotteries,” he writes, are the government’s version of “snickers bars and video games.” State commissions aren’t above manipulating the psychology of addiction or even making addiction itself an intrinsic part of the game itself.

The story of the modern lottery, he argues, began in the nineteen sixties, when a growing awareness of all the money to be made by the gambling industry collided with a crisis in state funding. Thanks to a growing population and rising inflation, many states were finding it difficult to balance their budgets without raising taxes or cutting services, both of which would anger voters.

Lotteries emerged as a solution to the problem. In addition to the money from ticket sales, a percentage of the total pool went as organizers’ revenues and profits. The rest was available for winners. In most cases, the prizes were a combination of lump sums and annuity payments. The latter offered a first payment upon winning and then 29 annual payments of increasing amounts, which would be payable to the winner for three decades.

Those who knew the math of how lottery prizes were determined understood that the larger the prize, the fewer tickets would be sold. Potential bettors were attracted to the chance of huge jackpots, but they also demanded a good shot at smaller prizes, too. Lottery commissioners responded by lowering the odds and adding more numbers. The result was a system in which the odds of winning the top prize were often much less than one-in-three million.

While that may have worked for the early incarnations of the lottery, it didn’t work in the late twentieth century. As the nation’s tax revolt intensified, states found themselves desperate for new revenue streams that wouldn’t offend their voters. That’s when the lottery grew from a few sporadic events to a sweeping, nationwide industry. It didn’t take long for the people running it to figure out how to keep their customers hooked. The results have been devastating for public services, educational systems, and local economies. In the end, it has also hurt the lottery’s image as a legitimate source of public funding.