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A lottery (or lotto) is a form of gambling that involves the drawing of numbers at random for a prize. Some governments outlaw lotteries, while others endorse it to the extent of organizing a national or state lottery. It is common to find some degree of regulation of lottery by governments. The most common regulations are prohibition of sale to minors and licensing of ticket vendors. Although lotteries were common in the United States and some other countries during the 19th century, by the beginning of the 20th century, most forms of gambling, including lotteries and , were illegal in the U.S. and most of Europe as well as many other countries. This remained so until well after World War II. In the 1960s, and lotteries began to re-appear throughout the world as a means for governments to raise revenue without raising taxes.
Lotteries come in many formats. For example, 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 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 revelries. The earliest records of a lottery offering tickets for sale is the lottery organized by Roman Emperor Augustus. 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 first recorded Italian lottery was held on 9 January 1449 in Milan organized by the Golden Ambrosian Republic to finance the war against the Republic of Venice. However, it was in Genoa that Lotto became very popular. People used to bet on the name of Great Council members, sortition, five out of ninety candidates every six months. This kind of gambling was called Lotto or Semenaiu. When people wanted to bet more frequently than twice a year, they began to substitute the candidates names with numbers and modern lotto was born, to which both modern legal lotteries and the illegal numbers game can trace their ancestry.
Between 1757 and 1836, for a period of about 80 years with some interruption during the French Revolution, the French state ran a profitable Loterie. The project was born out a series of initiatives to fund the École militaire. Instrumental to the birth of the Loterie were Giacomo Casanova and the Calzabigi brothers (Giovanni and Ranieri). Casanova defended the project in a series of conversations with Madame de Pompadour, the French mathematician Jean d'Alembert, Joseph de Pâris Duverney, intendent of the École, and the French minister of foreign affair.Stephen Stigler (2022). Casanova’s Lottery: The History of a Revolutionary Game of Chance, University of Chicago Press. Unlike modern lotteries where the state can never lose, in the French lottery the state could lose, but a wise choice of the payoff made losses so improbable as to ensure a profit for the state.
Thus, the lottery money received was an interest-free loan to the government during the three years that the tickets ('without any Blankes') were sold. In later years, the government sold the lottery ticket rights to brokers, who in turn hired agents and runners to sell them. These brokers eventually became the modern-day stockbrokers for various commercial ventures. Most people could not afford the entire cost of a lottery ticket, so the brokers would sell shares in a ticket; this resulted in tickets being issued with a notation such as "Sixteenth" or "Third Class".
Many private lotteries were held, including raising money for the London Company to support its settlement in America at Jamestown. The English State Lottery ran from 1694 until 1826. Thus, the English lotteries ran for over 250 years, until the government, under constant pressure from the opposition in Parliament, declared a final lottery in 1826. This lottery was held up to ridicule by contemporary commentators as "the last struggle of the speculators on public credulity for popularity to their last dying lottery".
Lotteries in colonial America played a significant part in the financing of both private and public ventures. It has been recorded that more than 200 lotteries were sanctioned between 1744 and 1776, and played a major role in financing roads, libraries, churches, colleges, canals, bridges, etc.John Samuel Ezell, Fortune's Merry Wheel, 1960. In the 1740s, the foundation of Princeton and Columbia Universities was financed by lotteries, as was the University of Pennsylvania by the Academy Lottery in 1755.
During the French and Indian Wars, several colonies used lotteries to help finance fortifications and their local militia. In May 1758, the Province of Massachusetts Bay raised money with a lottery for the "Expedition against Canada".
Benjamin Franklin organized a lottery to raise money to purchase cannons for the defense of Philadelphia. Several of these lotteries offered prizes in the form of "Spanish dollar". George Washington's Mountain Road Lottery in 1768 was unsuccessful, but these rare lottery tickets bearing Washington's signature became collectors' items; one example sold for about $15,000 in 2007. Washington was also a manager for Col. Bernard Moore's "Slave Lottery" in 1769, which advertised land and slaves as prizes in The Virginia Gazette.
At the outset of the Revolutionary War, the Continental Congress used lotteries to raise money to support the Colonial Army. Alexander Hamilton wrote that lotteries should be kept simple, and 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". Taxes had never been accepted as a way to raise public funding for projects, and this led to the popular belief that lotteries were a form of hidden tax.
At the end of the Revolutionary War the various states had to resort to lotteries to raise funds for numerous public projects.
In Austria the first lottery was drawn in 1751, during the reign of Empress Maria Theresia, and was named Lotto di Genova since it was based on 90 numbers.
The Spanish Christmas Lottery (officially Sorteo Extraordinario de Navidad soɾˈteo or simply Lotería de Navidad loteˈɾia) is a national lottery. It is organized every year since 1812 by a branch of the Spanish Public Administration, now called Loterías y Apuestas del Estado. The name Sorteo de Navidad was used for the first time in 1892.
The Spanish Christmas lottery is the second longest continuously running lottery in the world. This includes the years during the Spanish Civil War when the lottery draw was held in Valencia after the Republicans were forced to relocate their capital from Madrid. After the overthrow of the Republican government the lottery continued uninterrupted under the Franco regime.
==Ticket gallery==
| $2.04 billion pre-tax | Powerball | One winner | 10 November 2022 | World's largest jackpot | |
| £194 million | EuroMillions | One ticket holder from the United Kingdom | 19 July 2022 | Europe's largest jackpot | |
| Renminbi 570 million | China Welfare Lottery | China | One ticket holder from Beijing | 12 June 2012 | Asian largest prize and the biggest prize taken in China |
| R$244 million | Mega-Sena | Three ticket holders from Franca (SP), Aparecida de Goiania (GO) and São Paulo. | 31 December 2012 | South America's largest prize | |
| A$200 million | Powerball (Australia) | Three winners | 1 February 2024 | Australia's largest jackpot |
The largest single jackpot record in Canadian lottery history was a Lotto Max drawing on January 7, 2020, for a jackpot of $70 million.
In the current lottery played in Finland, the player chooses seven numbers between 1 and 40 (initially, until the autumn of 1980, six numbers between 1 and 40 were chosen, then for a few years seven numbers between 1 and 37 and then seven numbers between 1 and 39). In the draw, seven numbers and one (previously three and then two) additional numbers are drawn; the line price is 1 euro. The profit categories were changed, for example, from the 2011 round 41. The main victory at that time was with 7 correct results and the smallest victory with three actual and one additional number, the number of which was reduced from three to two. The lottery return percentage is 41.1.
Another lottery game played in Finland is Vikinglotto, which can be played in all Nordic countries as well as in Estonia, Latvia and Lithuania. In Vikinglotto, six actual numbers and two additional numbers out of 48 are drawn. There are five winning categories: 6 correct, 5 + extra number, 5 correct, 4 correct and 3 correct.
In Finland, an average of six million euros in winnings go unredeemed each year.
The Kerala State Lotteries became an inspiration for other Indian states that started their own lotteries. As of right now lotteries are available in Kerala, Goa, Maharashtra, Madhya Pradesh, Punjab, West Bengal, Assam, Arunachal Pradesh, Meghalaya, Manipur, Sikkim, Nagaland and Mizoram.
The public ban on lotteries in other states has not been very effective since several lottery providers allow Indians to play online. Indian players can play lotteries from all over the world thanks to online lottery agents and bookkeepers. Some states have tried to combat this with different measures. The state government of Tamil Nadu decided to ban GooglePay since it allows payments to online lotteries and awards its users in India with .
Indian lotteries provide a substantial economic boost for the states that provide them. In the fiscal year 2017–2018 Kerala collected GST worth Rs 908 crore and state revenue of Rs 1,691 crore.
Founded and incorporated by the Malaysian Government in 1969, it was focused on the commercialisation of 4-Digits–based games. On 1 August 1985, the government in a non-Tender offer privatisation, sold the company to businessman Vincent Tan who merged it into his Berjaya Group.
Today, Sports Toto is a wholly owned subsidiary of Berjaya Sports Toto Berhad (Bursa Malaysia: 1562), which is listed on the main market of Bursa Malaysia. It claims to be the largest operator in Malaysia of 4D-based games, with 680 sales outlets offering a total of 7 games.
For 2013, due to falling demand, the number of €20 tickets available was reduced from 180 million to 160 million, reducing the potential maximum prize pool to €2.24 billion (70% of ticket sales), with a maximum potential El Gordo of €720 million.
The present Thai lottery is managed by The Government Lottery Office, a state enterprise managed by the Ministry of Finance. The drawings take place on the 1st and 16th of each month, with the top price now up to 32 million Thai baht.
Shrines of Thai folklore and popular religion, such as Nang Ta-Khian, are often propitiated in order to be lucky in the Thai lottery draw.
Northern & Shell also operates a commercial lottery known as The Health Lottery, which distributes its revenue to support health-related charities and causes. To comply with the Gambling Act, which forbids other parties from operating a national lottery, The Health Lottery operates as an umbrella corporation representing a group of 51 society lotteries across the United Kingdom with a common drawing and prize pool. Each drawing is held on behalf of one or more of the society lotteries, whose revenues go to support health-related causes in their respective area. The Health Lottery received criticism on launch for only pledging to donate 20.3% of ticket costs to charity, compared to the National Lottery's 28%, and that the lottery's structure was designed to contravene British law regarding lotteries. In the UK, winning the lottery is correlated to expressing more preference for the Conservative Party. Winning larger prizes results in a larger shift in favour of the Conservative Party.
People's Postcode Lottery is a subscription lottery in the UK. The format was introduced by Dutch company Novamedia: players pay at minimum £10 monthly to play, and winning postcodes are announced daily. In accordance with restrictions under the Gambling Act 2005, the maximum amount which can be won by a single ticket is £500,000, or 10% of the total draw proceeds. A minimum of 33% of the ticket price from players' subscriptions supports various trusts, which in turn fund local and international charities and community projects. Some £850 million have been donated. People's Postcode Lottery has a number of celebrity ambassadors, including David Attenborough, Judi Dench, Shobna Gulati, Tim Healy, Stephen Jardine, Ellen MacArthur, Aggie MacKenzie, Carey Mulligan, John Stapleton and Emma Thompson. The lottery was the subject of a Channel 4 documentary, The Welsh Valley That Won the Lottery, about the residents of Rhymney who won in May 2022.
The precursor to legal lotteries were the underground "numbers game" of the 1800s, which operated out of "Policy shops" where bettors choose numbers. In 1875, a report of a select committee of the New York State Assembly stated that "the lowest, meanest, worst form ... that gambling takes in the city of New York, is what is known as policy playing". The game was also popular in Italian American neighborhoods known as the Italian lottery, and it was known in Cubans communities as bolita ("little ball"). Holice and Debbie, Our Police Protectors: History of New York Police Chapter 13, Part 1 . Accessed on 4/2/2005 By the early 20th century, the game was associated with poor communities, and could be played for as little as $0.01. The game's attractions to low income and working class bettors were the ability to bet small amounts of money, and that bookies could extend credit to the bettor. In addition, policy winners could avoid paying income tax. Different policy banks would offer different rates, though a payoff of 600 to 1 was typical. Since the odds of winning were 1000:1, the expected profit for was enormous.
The first modern government-run US lottery was established in Puerto Rico in 1934, followed by New Hampshire in 1964.
In 2018, Ohio became one of the first states to offer people a digital lottery option. The technology, developed by Linq3, allows players to play the lottery on their smart phones.
Accompanying the lottery is the number betting, an illegal form of lottery among the people, which uses the results of the jackpot of the legal traditional lottery as the prize-winning results. In Hanoi, the "agent" system of the betting game has developed along with traditional lottery stores and iced tea stalls, operating quite openly. In addition, some players have switched to online betting.
According to traditional lottery companies, the revenue from the traditional lottery is decreasing day by day because it cannot compete with Vietlott and the betting game.
| +Chances of matching different numbers of balls in a 6-from-49 lotto !Number of balls matched !Probability | |
| 6 | 1 in 13,983,816 |
| 5 | 1 in 54,201 |
| 4 | 1 in 1,032 |
| 3 | 1 in 57 |
| 2 | 1 in 7.6 |
| 1 | 1 in 2.4 |
| 0 | 1 in 2.3 |
In a simple 6-from-49 lotto, a player chooses six numbers from 1 to 49 (no duplicates are allowed). If all six numbers on the player's ticket match those produced in the official drawing (regardless of the order in which the numbers are drawn), then the player is a jackpot winner. For such a lottery, the chance of being a jackpot winner is 1 in 13,983,816.
In bonusball lotteries where the bonus ball is compulsory, the odds are often even lower. In the Mega Millions multi-state lottery in the United States, 5 numbers are drawn from a group of 70 and 1 number is drawn from a group of 25, and a player must match all 6 balls to win the jackpot prize. The chance of winning the jackpot is 1 in 302,575,350
The odds of winning can also be reduced by increasing the group from which numbers are drawn. In the SuperEnalotto of Italy, players must match 6 numbers out of 90. The chance of winning the jackpot is 1 in 622,614,630.
Most lotteries give lesser prizes for matching just some of the winning numbers, with a lesser prize for fewer matches. Although none of these additional prizes affect the chances of winning the jackpot, they do improve the odds of winning something and therefore add a little to the value of the ticket.
Some advance fee fraud scams on the Internet are based on lotteries. The fraud starts with e-mail spam congratulating the recipient on their recent lottery win. The email explains that in order to release funds the email recipient must part with a certain amount (as tax/fees) as per the rules or risk forfeiture.
Another form of scam involves the selling of "systems" which purport to improve a player's chances of selecting the winning numbers in a Lotto game. These scams are generally based on the buyer's (and perhaps the seller's) misunderstanding of probability and random numbers. Sale of these systems or software is legal, however, since they mention that the product cannot guarantee a win, let alone a jackpot.
There have also been several cases of cashiers at lottery retailers who have attempted to scam customers out of their winnings. Some locations require the patron to hand the lottery ticket to the cashier to determine how much they have won, or if they have won at all, the cashier then scans the ticket to determine one or both. In cases where there is no visible or audible cue to the patron of the outcome of the scan some cashiers have taken the opportunity to claim that the ticket is a loser or that it is worth far less than it is and offer to "throw it away" or surreptitiously substitute it for another ticket. The cashier then pockets the ticket and eventually claims it as their own.
The BBC TV series The Real Hustle showed a variation of the lottery scam in which a group of scammers pretended to have won a lottery, but was prevented from claiming the prize as the person who wrote the name on the back of the ticket was supposedly out of the country on that date. They were able to persuade a stranger to put up money as collateral in order to share in the prize pool.
On some occasions, the actual lottery draw itself has been compromised by fraudsters. The 1980 Pennsylvania Lottery scandal involved weighting balls in The Daily Number. In the Hot Lotto fraud scandal software code was added to the Hot Lotto random number generator allowing a fraudster to predict winning numbers on specific days of the year.
In 2003, Mohan Srivastava, a Canadians geological statistician, found non-random patterns in "Tic-Tac-Toe" tickets sold by the Ontario Lottery and Gaming Corporation. "Tic-Tac-Toe" was pulled off the shelves, and became the first game ever recalled by the OLG.
Lottery annuities are often for a period from 20 to 30 years. Some U.S. lottery games, especially those offering a "lifetime" prize, do not offer a lump-sum option. According to some experts, choosing the annuity is better than opting for the lump-sum, especially for those who lack investment experience.
In some online lotteries, the annual payments are only $25,000, with a balloon payment in the final year. This type of installment payment is often made through investment in government-backed securities. Online lotteries pay the winners through their insurance backup. However, many winners choose lump sum, since they believe they can get a better rate of return on their investment elsewhere.
In some countries, lottery winnings are not subject to personal income tax, so there are no tax consequences to consider in choosing a payment option. In France, Canada, Australia, Germany, Ireland, Italy, New Zealand, Finland, and the United Kingdom all prizes are immediately paid out as one lump sum, tax-free to the winner. In Liechtenstein, all winnings are tax-free and the winner may opt to receive a lump sum or an annuity with regard to the jackpot prizes.
In the US, federal courts have consistently held that lump sum payments received from third parties in exchange for the rights to lottery annuities are not capital assets for tax purpose. Rather, the lump sum is subject to ordinary income tax treatment.
Some people hire a third party to cash the lottery ticket for them. This can be done to avoid paying income taxes, hide the winnings from being seized for child support, or for money laundering of profits from illegal activity; some jurisdictions investigate overly frequent "winners" and may freeze payments to prevent these abuses.
In jurisdictions where public disclosure is required for winners to claim their prizes, some winners may hire an attorney to set up a blind trust for them so they can claim their prize and remain anonymous. This is done so that winners can avoid scams, jealousy, and other disadvantages that can come with winning a lottery jackpot.
Time Magazine mentions a "curse of the lottery". Financial consultant Don McNay provides anecdotes supporting this claim in his book, Life Lessons from the Lottery.
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