How America Went Broke With the Biggest Gamble in Our History

Lotteries have a long history, with their roots in ancient Rome. They were originally used as an amusement at dinner parties, with guests distributing tickets with different prize options (usually items of unequal value) to each other. The prize could range from dinnerware to fine art and even slaves, but the main goal was to raise funds for a public project.

In his book, “The Lottery: How America Went Broke with the Biggest Gamble in Our History,” the historian David M. Cohen explains that, after their resurgence in the nineteenth century, state lotteries took on a new role, serving as an essential source of funding for public works. This was especially true in the American colonies, where lotteries were used to fund roads, canals, libraries, churches, schools, and colleges.

These projects, of course, required a large number of ticket purchases. To maximize revenues, states typically sold multiple-ticket packages that included one or more very high-value prizes in addition to many smaller ones. These multiple-ticket packages were called “synopsis” tickets. The earliest such tickets were printed with the results of previous draws. The numbers, dates, and locations of past draws were listed on the front of the ticket to inform players about the likelihood that they would win a particular prize.

Despite a strong Protestant anti-gambling ethic, colonial America quickly embraced lotteries to finance its private and public ventures. During the early eighteenth century, for example, the American Colonies raised money by lotteries to build canals, bridges, and roads, as well as colleges, and even to finance its war against Canada. Lotteries grew in popularity as the nation developed and prospered, and they became commonplace in state legislatures across America.

By the late-twentieth century, however, lottery revenues had begun to lag behind rising population and inflation. In addition, the national tax revolt of the time was intensifying and making it harder for state governments to balance their budgets without raising taxes or cutting services.

This combination of rising interest in the lottery with a decline in state revenue left many state legislators with an unpleasant choice. In order to increase their income, they began to promote the lottery by changing its image from a mere gambling scheme to a “socially responsible” alternative to paying higher taxes or cutting social services.

The result was a massive shift in public opinion that began to favor the lottery over raising taxes and cutting social services. As a result, dozens of states now hold a lottery and, according to Clotfelter and Cook, Americans spend an astonishing $80 billion on them every year.

Unlike the games of chance that people play in casinos and private clubs, state lotteries are not above availing themselves of the psychology of addiction. Everything about them—from the advertising campaigns to the math on the front of the ticket—is designed to keep the gamblers coming back for more. This is a familiar strategy for tobacco and video-game manufacturers, but it is rarely used by government officials in the name of public health.