If you’ve ever been to a lottery, you’ll know how it works: players select a number from a large pool, and prizes are distributed based on how many of those numbers match a randomly chosen drawing. In general, though, the more the numbers match, the more prizes they’ll win. The American Heritage Dictionary defines the lottery as “a contest where prizes are awarded based on the random selection of numbers.”
In FY 2006, U.S. state governments took in $17.1 billion in lottery profits. These funds are then allocated to various groups and organizations, as shown in table 7.2. In all, $234.1 billion was distributed to various groups and organizations since 1967. The state of New York topped the list with $30 billion in education profit, while California and New Jersey were next with $18.5 and $15.6 billion, respectively. However, no single lottery is the same.
Many lottery supporters argue that the state benefits from the national lotteries, mainly because it provides an easy source of revenue without raising taxes. Larger companies that participate in the lottery also benefit from it by paying for advertising and computer services. As long as players are responsible, the lottery generates significant amounts of revenue. While these figures are not definitive, they do indicate that a lottery can be an important part of the monthly consumer spending in the U.S.
The first modern European lotteries date back to the 15th century, when the French king, Francis I, introduced them to the country. They became popular throughout Europe and reached the United States by the early seventeenth century. King James I of England created a lottery in 1612 to help finance the settlement of Jamestown, Virginia. Throughout the 18th century, lottery funding was used by various private and public organizations to fund projects such as colleges, wars, and public-works.
New York adapted the lottery as early as 1967, and by the end of that year, the state had grossed $53.6 million. The popularity of the lottery soon spread beyond New York, resulting in the establishment of twelve other state lotteries. By the end of the decade, it had become firmly entrenched in the Northeast. In addition to being a means of raising public funds without increasing taxes, the lottery also appealed to Catholic populations, who were generally tolerant of gambling activities.
The number of people who play the lottery is inversely related to their educational level. People with less education played the lottery more than people with more education. Similarly, lottery spending per capita was highest in counties with more African-American residents. While lottery spending is still higher among wealthy citizens, it is generally not disproportionately high in poorer neighborhoods. The average lottery spending per capita in these areas was higher in FY 2002. But despite this disparity, lottery playing continues to grow among those with less means.
A lottery was first used in the United States in the 1760s by George Washington. It was intended to finance Mountain Road in Virginia. Franklin, a supporter of the lottery, supported its use for cannons during the Revolutionary War. And in Boston, John Hancock ran a lottery to fund the rebuilding of Faneuil Hall. But according to a 1999 report by the National Gambling Impact Study Commission, most of these lotteries were unsuccessful.
