Drawing lots for public money

Drawing lots is much older than gambling on the result. Allotment by lot was used to fill offices, divide inheritances and settle disputes long before anyone thought to sell tickets, and something of that older idea survives in the word lottery itself. The modern form appears when a state notices that people will pay for a chance at a prize and that the difference between what is taken in and what is paid out can be directed to something else.

The design that spread across Europe came from Genoa, where wagering on the outcome of elections to public office, decided by drawing names, was formalised into a game with numbers substituted for candidates. That structure, choosing a few numbers from a larger pool, is essentially the structure of every draw game in this index. In England a state lottery was authorised in the 1560s, with prizes and a scheme of funding public works, and lotteries were used through the eighteenth century to pay for bridges, harbours, museums and war debt.

The problems that followed were remarkably consistent. Tickets were expensive, so they were sold in fractions, and a market grew up in shares of shares. A parallel trade appeared in insuring numbers: side bets, taken by private operators, on whether a given number would be drawn at all. This was far larger than the official game in some periods, entirely unregulated, and the source of most of the fraud that eventually discredited the whole enterprise. British state lotteries were wound up in the 1820s after decades of argument about exactly that.

Prohibition did not end the games; it moved them. The numbers game that operated in American cities through the first half of the twentieth century was a private daily lottery in everything but name, using a published number nobody could plausibly fix, such as a figure from racetrack receipts or a stock index, as its draw. It offered around six hundred to one on a three-digit selection where the true odds were nine hundred and ninety-nine to one, a cost of about forty per cent per ticket, and it flourished for decades in communities with limited access to banking or credit.

The revival, when it came, used the same argument as the original authorisations: a state needs money, the activity exists anyway, and licensing it converts an untaxed private trade into public revenue. American state lotteries restarted in the 1960s on that reasoning, and a national draw was introduced in Britain in the mid-1990s with a fixed share of sales directed to designated good causes. The mechanics are unchanged from Genoa. What changed is who takes the difference between the price of a ticket and the value of the chance it carries.