History of the US Lottery | theLotter

The History of the US Lottery

2 Mar 2015

Lotteries have been playing a role in US history for even longer than the country has been independent. How exactly has the lottery impacted American history? Take a ride in our lottery time machine and explore lotteries throughout the ages. And remember you could be the one to make US Lottery history in the future when you play Mega Millions and US Powerball lottery online!

History of the US Lottery

Where the Streets Are Paved With Lottery Tickets

When he wasn’t busy engaging in witch hunts, inspiring classic Shakespearean works, or putting down Guy Fawkes and his Gunpowder Plot, King James I of England (also known as King James VI of Scotland) was a pretty big fan of the English colonialization of America. And how did Colonial America get its start? The Lottery of course! In 1612, King James I approved the creation of a lottery that was used by the Virginia Company of London to help raise money for the settlement of England’s first permanent colony at Jamestown, Virginia. After the success of Jamestown, more and more people in England became interested in settling in the New World; these settlements became towns, cities and colonies. So what impact has the lottery had on the US? Some people might say – with much research to back up the claim – that the United States of America would not be the same country it is today without the lottery.

Over 200 lotteries were permitted to take place in Colonial America between the years of 1744 and 1776, with lottery revenues helping to finance nearly everything necessary for the development of the colonies: from libraries, universities, and churches to bridges, canals, and roads.

A great example of this was the 1761 Providence Street Lottery in the Colony of Rhode Island. The residents of Providence petitioned the General Assembly of Rhode Island to establish a lottery in the hopes of raising money to pave the city streets. The lottery was approved and the people of Providence got their streets paved with the proceeds. For generations after, immigrants from all over the world came to America seeking freedom and fortune in a land where many said that the streets were paved with gold; little did they know that the streets were actually paved with lottery tickets!

The Founding Fathers of Liberty and Lottery

History of US Lottery

Because of the lure of prize money and the good public works that were coming from the proceeds, lotteries grew into a huge colonial phenomenon. However, the love of the lottery was not something just for the common folks of the colonies – even the Founding Fathers saw lotteries as a valuable tool for both personal and charitable use. Thomas Jefferson tried to set up a lottery to pay off his debts in his later years, but the attempt failed due to regulations and various other factors. George Washington set up many lotteries in his lifetime, including the ill-fated Mountain Road Lottery, which was created in order to construct a resort in Virginia. John Hancock, most famous for his super stylish signature on the United States Declaration of Independence, set up a lottery in Massachusetts in order to pay the costs of rebuilding Faneuil Hall after it was destroyed by a fire in 1761. The lottery was a success and the Hall was rebuilt in time for it to become one of the most important sites in pre-Revolution America, nicknamed “the Cradle of Liberty”. A Faneuil Hall lottery ticket signed by Hancock was auctioned off for $9,700 in 2011. Appropriately, the first drawing of the Massachusetts State Lottery was held at Faneuil Hall in 1972, more than two hundred years after the Massachusetts Colonial Lottery saved the day!

The Lottery Goes to War

More important than financing “the Cradle of Liberty”, the lottery actually helped finance the Revolutionary War, which led to America’s independence from Great Britain. Benjamin Franklin created a lottery that helped purchase a cannon to protect Philadelphia; and in 1776, the Continental Congress approved lotteries in order to raise the funds necessary for the Colonial Army. That’s right – the Lottery helped build up an army against the Crown – the very monarchy that created lotteries in order to finance the colonies in the first place. Talk about turning the tables!

Since the Boston Tea Party made it pretty clear how much would-be Americans hated taxes, the Founding Fathers couldn’t raise an army through those means, making lottery profits the perfect way to finance big projects without explicitly collecting taxes from the people. Using lotteries to pay for both public and private projects continued throughout the War and even after the Colonists’ victory over England. Due to the negative attitude toward outright taxation and lack of banking infrastructure in the first decades of the United States of America, many states had to use lottery profits as their main source of revenue and financed huge public works through them.

An Ivy League Lottery

One of those huge public works was in the form of molding America’s future, their best and brightest. It is well-known that modern US lotteries help fund education, but this has actually been happening as far back as the 18th century. World-renowned universities including Harvard, Princeton, Columbia, and Yale all were partially funded through various lotteries. Stoughton Hall and Holworthy Hall at Harvard were both built with lottery proceeds in the 1800s.

From the last decade of the 18th century to the outbreak of the US Civil War, it is estimated that 50 colleges/universities and 300 schools were established with help from lottery funds. Other projects such as jails, hospitals, orphanages, and libraries were aided by lottery proceeds in the same period.

Prohibition Strikes the Lottery

History of US Lottery

The lottery may have done much good for the young nation, but the history of the lottery in the United States isn’t entirely positive. While Prohibition may bring to mind Al Capone, smashed moonshine, and flappers for most people, the banning of alcohol sales wasn’t the only industry that was once prohibited by the US government, only to become legal again years later. In the first part of the 19th century, lotteries were damaged by corruption, bad reputation, and outright thievery. State governments wanted to regulate these privately-operated lotteries but found it impossible at the time, thus the move toward a nation-wide prohibition on lotteries began.

In 1821, New York became the first state to ban lotteries when they added a provision to the state constitution which prohibited lottery in all forms, both privately- and government-run.

One of the most famous lottery scandals was the Grand National Lottery of 1823. Congress allowed a lottery to be established to pay for the beautification of Washington, DC. However, the winnings were never paid out and the winner of the $100,000 jackpot (approximately $2 million in today’s money) went all the way to the Supreme Court of the United States to get their rightful winnings. This led to massive protests and anti-lottery sentiment amongst citizens and government officials alike.

Because of the Grand National Lottery scandal and other instances of well-publicized corruption, many states followed New York’s lead and by 1860, all but three states – Delaware, Missouri, and Kentucky – had banned lotteries.

A Faulty Comeback

The US Civil War decimated large parts of the Southern states and the cost of reconstruction was more than those states could afford. As was the case with the Revolutionary War, one state government turned to lottery proceeds to fund their reconstruction plans. In 1868, Louisiana authorized the Louisiana Lottery Company, a privately-owned company, to hold lotteries in that state, as well as giving them a 25-year charter. That charter stated that as long as the Louisiana Lottery Company donated $40,000 per year to the Charity Hospital of New Orleans, the Company could keep the rest of the profits, tax-free. The Company began to sell lottery tickets throughout the country and quickly became one of the most monetarily successful businesses in the US. Roughly 93% of their total revenue was made from sales outside Louisiana; people were so excited to play the lottery as it had been banned in most states for decades by then. The jackpot amount at the start of the Lottery was $4275.25.

It was not all as appeared with the Louisiana Lottery Company however; like the lotteries of the 1820s, it was rife with corruption and bribery. The US federal government forced the Louisiana Lottery Company to disband before their 25-year contract was over; in 1890, Congress banned the sale of lottery tickets through the mail, and the Company moved to Honduras. Five years later, in 1895, lotteries were completely banned in the US.

The Modern US Lottery

History of US Lottery

While the Louisiana Lottery Company’s attempt at a lottery comeback was a disaster, people never stopped their love of playing the lottery; Americans illegally participated in international lotteries like the Irish Hospitals’ Sweepstake in the 1930s, which financed several hospitals in the Irish Free State. However, legal lotteries were still having an immense impact on American history, even if the lotteries weren’t held on American soil. In the 1870s, the French-American Union held a lottery in Paris to help pay for the Statue of Liberty – the symbol of the American Dream for millions of people around the world.

It wasn’t until 1964 that lotteries were once again made legal in the United States, and have become a facet of American culture ever since. Larry Pickett, a New Hampshire state representative, decided that a sweepstakes lottery would be a great way to raise money for public education; in 1863, his proposal passed and the bill was signed by Governor John King. The first legal lottery of the modern period began to sell tickets on March 12, 1964. The total sales of lottery tickets in 1964 amounted to $5.7 million.

New York and New Jersey followed New Hampshire’s lead, and by 1971, nationwide lottery revenues totaled over $100 million. New Jersey Lottery was the first lottery organization to use automated ticketing machines in the 1970s.

As of today, 44 states out of 50 have approved lotteries. The first multi-state lottery began in 1985 in Maine, New Hampshire, and Vermont. Three years later, in 1988, the Multi-State Lottery Association formed another lottery which included 6 states and Washington, DC. That lottery is now known as Powerball. Mega Millions – first named The Big Game – was established in 1996. Lotteries are immensely successful in the US; in 2009, they raised $17.6 BILLION in total revenue for state budgets throughout the country. The current US jackpot record is Powerball’s $1.6 billion jackpot, won by three tickets on 13 January 2016. The modern US lottery as we know it will likely be along for a long time to come – only with bigger and better jackpots as the years go by.

Our trip down lottery memory lane has shown that the history of US Lottery is as incredibly rich and fascinating as the history of the country itself. From Jamestown to Mega Millions jackpots, lotteries have captivated society and dared its citizens to dream – and play for – the American Lottery Dream.