Early history of Lotteries

The first recorded signs of a lottery are Keno slips from the Chinese Han Dynasty between 205 and 187 B.C. These lotteries are believed to have helped to finance major government projects like the Great Wall of China. From the Chinese "The Book of Songs" (second millennium B.C.) comes a reference to a game of chance as "the drawing of wood", which in context appears to describe the drawing of lots. From the Celtic era, the Cornish words "teulet pren" translates into "to throw wood" and means "to draw lots". The Iliad of Homer refers to lots being placed into Agamemnon's helmet to determine who would fight Hector.

The first known European lotteries were held during the Roman Empire, mainly as an amusement at dinner parties. Each guest would receive a ticket, and prizes would often consist of fancy items such as dinnerware. Every ticket holder would be assured of winning something. This type of lottery, however, was no more than the distribution of gifts by wealthy noblemen during the Saturnalian revelries. The earliest records of a lottery offering tickets for sale is the lottery organized by Roman Emperor Augustus Caesar. The funds were for repairs in the City of Rome, and the winners were given prizes in the form of articles of unequal value.

The earliest public lottery on record is that which was held in the Dutch town of Sluis in 1434.

The first recorded lotteries to offer tickets for sale with prizes in the form of money were held in the Low Countries during the period 1443–1449. Various towns held public lotteries to raise money for town fortifications, and to help the poor. The town records of Ghent, Utrecht, and Bruges indicate that lotteries may be even older. A record dated May 9, 1445 at L'Ecluse refers to raising funds to build walls and town fortifications, with a lottery of 4,304 tickets and total prize money of 1737 florins. In the 17th century it was quite usual in the Netherlands to organize lotteries to collect money for the poor. Tickets cost about four guilders, and the prizes were paintings (50 to 100 per lottery); some by painters today considered famous such as Jan van Goyen.

The Dutch were the first to have solely cash prizes and to base these prizes on the odds of winning — roughly a quarter of tickets winning a prize. The lottery proved very popular and was hailed as a painless form of taxation. In the Netherlands the lottery was used to raise money in support of the poor, to build dikes and town defenses, and to free sailors from slavery in Arab countries. The English word lottery stems from the Dutch word loterij, which is derived from the Dutch noun lot meaning fate. The Dutch state-owned staatsloterij is the oldest running lottery.

England, 1566–1826

Although the English probably first experimented with raffles and similar games of chance, the first recorded official lottery was chartered by Queen Elizabeth I, in the year 1566, and was drawn in 1569. This lottery was designed to raise money for the "reparation of the havens and strength of the Realme, and towardes such other publique good workes." Each ticket holder won a prize, and the total value of the prizes equaled the money raised. Prizes were in the form of silver plate and other valuable commodities. The lottery was promoted by scrolls posted throughout the country showing sketches of the prizes.

Thus, the lottery money received was an interest free loan to the government during the three years that the tickets ('without any Blanks') were sold. In later years, the government sold the lottery ticket rights to brokers, who in turn hired agents and runners to sell them. These brokers eventually became the modern day stockbrokers for various commercial ventures. Most people could not afford the entire cost of a lottery ticket, so the brokers would sell shares in a ticket; this resulted in tickets being issued with a notation such as "Sixteenth" or "Third Class."
English State Lottery Ticket 1814 issued by broker Swift & Co.

Many private lotteries were held, including raising money for The Virginia Company of London to support its settlement in America at Jamestown. The English State Lottery ran from 1694 until 1826. Thus, the English lotteries ran for over 250 years, until the government, under constant pressure from the opposition in parliament, declared a final lottery in 1826. This lottery was held up to ridicule by contemporary commentators as "the last struggle of the speculators on public credulity for popularity to their last dying lottery."

Early America, 1612–1900
Ticket from an 1814 lottery to raise money for Queen's College, New Jersey.

An English lottery, authorized by King James I in 1612, granted the Virginia Company of London the right to raise money to help establish settlers in the first permanent English colony at Jamestown, Virginia.

Lotteries in colonial America played a significant part in the financing of both private and public ventures. It has been recorded that more than 200 lotteries were sanctioned between 1744 and 1776, and played a major role in financing roads, libraries, churches, colleges, canals, bridges, etc. In the 1740s, the foundation of Princeton and Columbia Universities was financed by lotteries, as was the University of Pennsylvania by the Academy Lottery in 1755.

During the French and Indian Wars, several colonies used lotteries to help finance fortifications and their local militia. In May 1758, the State of Massachusetts raised money with a lottery for the "Expedition against Canada."
Massachusetts Lottery Ticket 1758 French & Indian Wars

Benjamin Franklin organized a lottery to raise money to purchase cannon for the defense of Philadelphia. Several of these lotteries offered prizes in the form of "Pieces of Eight." George Washington's Mountain Road Lottery in 1768 was unsuccessful. However, these rare lottery tickets bearing George Washington's signature have become collectors' items which sold for about $15,000 in 2007. Later, in 1769, Washington was a manager for Col. Bernard Moore's "Slave Lottery", which advertised land and slaves as prizes in the Virginia Gazette.
1776 Lottery ticket issued by Continental Congress to finance Revolutionary War.

At the outset of the Revolutionary War, the Continental Congress used lotteries to raise money to support the Colonial Army. Alexander Hamilton wrote that lotteries should be kept simple, and that "Everybody ... will be willing to hazard a trifling sum for the chance of considerable gain ... and would prefer a small chance of winning a great deal to a great chance of winning little." Taxes had never been accepted as a way to raise public funding for projects, and this led to the popular belief that lotteries were a form of hidden tax.

At the end of the Revolutionary War the various states had to resort to lotteries to raise funds for numerous public projects. For many years these lotteries were highly successful and contributed to the nation's rapid growth. The lotteries were used for such diverse projects as the Pennsylvania Schuylkill – Susquehanna Canal (lottery in May 1795), and Harvard College (lottery in March 1806). Many American churches raised building funds through state authorized private lotteries.

However, lotteries eventually became a cause of financial mismanagement and scandal. Most notorious was the Louisiana State Lottery (1868–1892) which was aptly called the "Golden Octopus" because its tentacles reached into every home in America.

Bolita, a type of lottery popular in Cuba, was brought to Tampa, Florida in the 1880s and flourished in Ybor City's many Latin saloons.

Toward the end of the 19th century a large majority of state constitutions banned lotteries. Finally, on July 29, 1890, U.S. President Benjamin Harrison sent a message to Congress demanding "severe and effective legislation" against lotteries. Congress acted swiftly, and banned the U.S. mails from carrying lottery tickets. The Supreme Court upheld the law in 1892, and that brought a complete halt to all lotteries in the U.S.A. by 1900.

When lotteries raised their head again in 1964, it would take many years of constitutional amendments by the various states before the lotteries were allowed to flourish again.

On March 12, 1964, New Hampshire became the first state to sell lottery tickets in the modern era.
Today most of the US States offer one or more lotto games or multi-state lotteries.