The casting of lots to decide decisions and determine fates has a long history (see the Bible) but lotteries as a method of raising money are of more recent origin. They became popular in the Low Countries in the 15th century, when towns held them to raise funds for town fortifications and help the poor.
In many states, the amount of the prize depends on how many tickets are sold and the percentage of the total ticket sales that match a particular number combination. The more matching numbers, the larger the prize. The lottery is often promoted as a “good cause,” and in fact, it can have positive social impacts. But it’s important to remember that the lottery is a form of gambling, and it can have negative effects on poor people, problem gamblers, and others.
For that reason, state governments are required to hold a referendum before establishing a lottery. And while lotteries can benefit a wide range of social services, they’re most successful when their benefits are framed as helping a specific public good—for example, education.
But critics argue that this earmarking is misleading, as the lottery proceeds simply reduce the appropriations the legislature would otherwise have to allot from the general fund for that purpose. In other words, it does not actually increase overall funding for education or any other program.
In the immediate post-World War II period, lottery proceeds allowed states to expand their array of programs without significantly increasing taxes on middle-class and working-class families. But as states’ budgets began to strain in the 1970s, this arrangement came under pressure. And by the 1990s, it was clear that lotteries were no longer a sufficient source of revenue to support government programs.