The lottery is considered to be a state sanctioned form of gambling which takes the form of a drawing of lots in exchange for a large cash prize. Some governments do not run lotteries and outright outlaw them, but most governments run one form or another of lottery system. Lotteries have a long history, and have taken many forms over the years. Modern lotteries are all quite similar in their basic concept. Anyone who wishes to participate purchases a ticket, selects a series of numbers, and the prize is paid out of a fund composed of a percentage of ticket sale revenues. Because most lotteries allow ticket purchasers to select numbers individually, multiple winners are possible.

The very first lottery was developed in China during the Han Dynasty around the year 205 BCE, with the game known today as Keno, which is usually played in casinos. Keno is said to have been the game that paid for the Great Wall of China. In Europe, the lottery was a mainstay of the Roman Empire, the first of which was held by the emperor Augustus Caesar in order to obtain funds to repair the city of Rome.

Modern Lotto was developed in the city of Genoa in Italy during the 15th century. It was originally a game in which people could bet on names of Great Council member elections. Due to the popularity of the game, and since elections were only held once a year, the names were replaced with numbers.

Lotteries spread from Italy to other countries in Europe. The lottery arrived to France in 1539, but was a failure from its inception. Tickets were too expensive for peasants, and those who could afford tickets opposed the lottery on the grounds that it seemed inappropriate to allow the poor to become rich.

By 1566, England had its own lottery system, chartered by Queen Elizabeth I. The intended purpose of the lottery was for the “reparation of the havens and strength of the Realme”. The first English lottery was unique in that each ticket purchaser was a winner, with all the winnings totaling the amount of money raised through ticket sales. It was in essence a redistribution of money. In this way, the lottery allowed the government to use the revenues as an interest free loan. A lottery held in 1612 operated by the Virginia Company of London and authorized by King James I, was used to raise the funds to establish the colony of Jamestown in Virginia, the first American colony.

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The Lottery arrived to American shores in the 18th century. They were used by the colonies to fund the wars agains the French, the Indians, and the Expedition against Canada. When the Revolutionary War began, the Continental Congress raised funds by a lottery system. Alexander Hamilton wrote that “Everybody…will be willing to hazard a trifling sum for the chance of considerable gain…and would prefer a small chance of winning a great deal to a great chance of winning little.” This was the basis for the modern lottery that later developed in the United States.

The lottery distinguishes itself from every other wagering game by the great disparity between the size of the wager and the potential prize and also because of its extremely unlikely chances of matching a jackpot. Modern lotteries were designed to be a form of gambling that anyone, from any social strata, could take part in. The cost of a ticket has always been low enough that anyone could afford to play. This ensured a massive number of tickets sold, which in turn boosts the size of the jackpot. In modern lotto systems, prizes often range in the hundreds of millions of dollars.

Critics of state lotteries often call them voluntary taxes, or math taxes. This is a way of saying that the chances of winning are so low, it is as though lotto players voluntarily hand over their money to an optional tax. A way to understand this is that not only are the chances of winning a jackpot spectacularly small, but the actual value of a purchased ticket is smaller than the purchaser imagines. Because of taxes and the fact that prizes are often shared, each ticket loses approximately 70% of its initial worth at the time of purchase. Still, prizes are often large enough to offset this imbalance.