The casting of lots for making decisions and determining fates has a long record in human history, including several instances in the Bible. But lotteries that distribute prize money are of more recent origin, with the first recorded public ones dating to the 15th century in the Low Countries (Ghent, Bruges, and others).
In America they became widespread after 1744, playing major roles in financing private and public projects, including constructing the British Museum, repairing bridges, supplying a battery of cannons for the defense of Philadelphia, and rebuilding Faneuil Hall in Boston. They also helped finance the Revolutionary War and numerous projects in the colonies, such as schools, canals, and roads.
Lotteries are a classic case of a policy area that is at cross purposes with the general public interest. State governments run them as a business with an eye to maximizing revenues, and lottery advertising necessarily promotes gambling. This promotion may have negative consequences for the poor, problem gamblers, and so forth; but, even if it does not, is running a lottery an appropriate function of the government?
In a lottery, players buy tickets for a fixed sum of money and hope that their numbers match those randomly spit out by machines. The winners receive prizes ranging from small trifles to large sums of money. Prize amounts are often paid in installments, or, in the case of a very large jackpot, as a lump sum (at a discount from the headline amount due to taxes and inflation). Those who choose to take the lump-sum option typically have to pay income tax on it.
