A lottery is a scheme for the distribution of prizes by chance. In the United States, lotteries are regulated and run by state governments. State legislatures grant themselves the exclusive right to conduct a lottery and use the proceeds solely to fund government programs. As of August 2004, forty-four states and the District of Columbia operated lotteries.
The drawing of lots to determine ownership or other rights is recorded in ancient documents, including the Bible. It became common in Europe during the sixteenth century, and in America with the first Jamestown, Virginia settlement in 1612. State legislators have used lotteries ever since to raise money for towns, wars, colleges, canals, roads, and other public works projects.
In the United States, all state-run lotteries operate as monopolies; they do not compete with each other or allow private commercial lotteries to sell tickets. Each state government decides how to organize and run its lottery, but the basic operation is the same: people pay a small sum to buy tickets, draw numbers or have machines randomly select them, and win prizes if their tickets match those drawn.
The early history of lotteries is linked to the history of gambling and state constitutions. During the 1740s and 1750s, many of the colonial American colonies held lotteries to raise funds for public and private ventures, such as canals, bridges, roads, and colleges. The lotteries proved very popular and were hailed as a painless form of taxation.
Until the 1960s, lotteries were a way for states to expand their array of services without onerous taxes on working people. When the economy began to slow down in that era, lottery revenues decreased. This led to a shift in the marketing of lotteries. Instead of touting the supposedly “wacky” and “fun” nature of the games, which obscures their regressivity, the message increasingly has been that the lottery is an effective tool for supporting important social services.
As a result of this change in messaging, lottery commissions have started to rely on two messages primarily. The first is to emphasize that winning the lottery is fun and to stress the experience of scratching a ticket. The second message is to remind people that the lottery can be a serious gamble and to encourage players to play responsibly.
In addition to promoting the games, state lotteries also have developed programs designed to support retailers. These include merchandising and sales training for retailers, as well as special online resources such as a lottery retailer optimization program in which lottery officials supply retailers with demographic data to help them increase their sales. The New Jersey lottery, for example, launched an Internet site during 2001 just for its lottery retailers, allowing them to read about game promotions and ask questions of lottery personnel online.
The NGISC final report expressed concern about the heavy reliance of lottery profits on less-educated, lower-income people. It also noted that a disproportionate number of lottery outlets are located in low-income neighborhoods.