The casting of lots to make decisions and to determine fate has a long history in human culture, although its use for material gain is more recent. The first public lottery to distribute prize money was probably a scheme for municipal repairs in Rome in the early 15th century, but records of private lotteries date back much further. These were largely entertainment events for the wealthy during dinner parties and lasted up to the 17th century, when they began to be used to raise funds for colleges and other public works.
In colonial America, lotteries played a large role in obtaining “voluntary taxes,” and they helped finance roads, libraries, churches, schools, canals, and bridges. They were also used to fund universities such as Harvard, Dartmouth, Yale, King’s College (now Columbia), and William and Mary. Benjamin Franklin sponsored a lottery to raise money for cannons during the American Revolution, and Thomas Jefferson sponsored one in 1826 to help alleviate his crushing debts.
State lotteries have been around for a long time, but the modern lottery business model is relatively new. In this model, a state legislates a monopoly for itself, establishes an agency or public corporation to run the operation, and begins operations with a modest number of fairly simple games. As the popularity of these games rises, the lottery progressively expands into additional games and new formats. The growing revenues entice politicians to promote lotteries as sources of tax revenue without raising rates or cutting programs. Lottery officials face the challenge of promoting the product to a wide variety of people with diverse preferences and motivations.
