A
lottery is a form of gambling which involves the
drawing of lots for a prize. Some governments
outlaw it, while others endorse it to the extent
of organizing a national lottery. It is common
to find some degree of regulation of lottery by
governments.
At the beginning of the 20th century, most forms
of gambling, including lotteries and sweepstakes,
were illegal in many countries, including the
U.S.A. and most of Europe. This remained so until
after World War II. In the 1960s casinos and lotteries
began to appear throughout the world as a means
to raise revenue in addition to taxes.
Lotteries
are most often run by or on behalf of national
or local governments. They are sometimes described
as a regressive tax, albeit a voluntary one, since
those most likely to buy tickets, and to spend
a larger proportion of their money on them, are
typically less affluent people. The astronomically
high odds against winning the larger prizes have
also led to the epithets of a "tax on stupidity"
and a "math tax". Although the use of
the word "tax" is not strictly correct,
these descriptions are intended to suggest that
lotteries are government-sanctioned operations
which will attract only those people who fail
to understand that buying a lottery ticket is
a poor economic decision. Indeed, after taking
into account the present value of a given lottery
prize as a single lump sum cash payment, the impact
of any taxes that might apply, and the likelihood
of having to share the prize with other winners,
it is not uncommon to find that a ticket for a
major lottery is worth less than one third of
its purchase price. In other words, if a lottery
ticket costs US$1 to purchase, its true economic
worth may be only US$0.30 or so at the time of
purchase. Of course, this is just a hypothetical
example, and the actual value will depend on the
details of each lottery. Some lotteries may offer
tickets that are worth less than 20% of their
price, while others may be worth over 50%. To
raise money, lottery operators must offer tickets
worth much less than what one pays for them, so
the lottery is a bad choice for customers trying
to come out ahead.
Lotteries come in many formats. The prize can
be a fixed amount of cash or goods. In this format
there is risk to the organizer if insufficient
tickets are sold. More commonly the prize fund
will be a fixed percentage of the receipts. A
popular form of this is the "50-50"
draw where the organizers promise that the prize
will be 50% of the revenue. Many recent lotteries
allow purchasers to select the numbers on the
lottery ticket resulting in the possibility of
multiple winners.
The purchase of lottery tickets by large numbers
of people is arguably economically irrational.
However, in addition to the chance of winning,
the ticket may enable some purchasers to experience
a thrill and to indulge in a fantasy of becoming
wealthy. If the entertainment value (or other
non-monetary value) obtained by playing is high
enough for a given individual, then the purchase
of a lottery ticket could actually represent a
gain in overall utility. In such a case, the monetary
loss would be outweighed by the non-monetary gain,
thus making the purchase a rational decision for
that individual.
Lottery tickets are usually scanned in large numbers,
using marksense-technology. With today's computer
performance, it takes less than one second to
check if a particular combination was picked up
by anyone, even for lotteries like Euromillions
or Mega Millions.
Early
history
The
first recorded signs of a lottery are Keno slips
from the Chinese Han Dynasty between 205 and 187
B.C. These lotteries are believed to have helped
to finance major government projects like the
Great Wall of China. From the Chinese "The
Book of Songs" (second millennium B.C.) comes
a reference to a game of chance as "the drawing
of wood", which in context appears to describe
the drawing of lots. From the Celtic era, the
Cornish words "teulet pren" translates
into "to throw wood" and means "to
draw lots". The Iliad of Homer refers to
lots being placed into Agamemnon's helmet to determine
who would fight Hector.
The first known European lotteries were held during
the Roman Empire, mainly as an amusement at dinner
parties. Each guest would receive a ticket, and
prizes would often consist of fancy items such
as dinnerware. Every ticket holder would be assured
of winning something. This type of lottery, however,
was no more than the distribution of gifts by
wealthy noblemen during the Saturnalian revelries.
The earliest records of a lottery offering tickets
for sale is the lottery organized by Roman Emperor
Augustus Caesar. The funds were for repairs in
the City of Rome, and the winners were given prizes
in the form of articles of unequal value.
The earliest public lottery on record is that
which was held in the Dutch town of Sluis in 1434.
The first recorded lotteries to offer tickets
for sale with prizes in the form of money were
held in the Low Countries during the period 1443–1449.
Various towns in Flanders (parts of Belgium, Holland,
and France) held public lotteries to raise money
for town fortifications, and to help the poor.
The town records of Ghent, Utrecht, and Bruges
indicate that lotteries may be even older. A record
dated May 9, 1445 at L'Ecluse refers to raising
funds to build walls and town fortifications,
with a lottery of 4,304 tickets and total prize
money of 1737 florins.[1] In the 17th century
it was quite usual in the Netherlands to organize
lotteries to collect money for the poor. Tickets
cost about four guilders, and the prizes were
paintings (50 to 100 per lottery); some by painters
today considered famous such as Jan van Goyen.
The Dutch were the first to have solely cash prizes
and to base these prizes on the odds of winning
— roughly a quarter of tickets winning a
prize. The lottery proved very popular and was
hailed as a painless form of taxation. In the
Netherlands the lottery was used to raise money
in support of the poor, to build dikes and town
defenses, and to free sailors from slavery in
Arab countries. The English word lottery stems
from the Dutch word loterij, which is derived
from the Dutch noun lot meaning fate. The Dutch
state-owned staatsloterij is the oldest running
lottery. (Credit:
Wikipedia).
