State Lottery

Lotteries are ancient games, long predating the founding of the United States. Their popularity in Europe, and especially in England, helps explain why the first lotteries were held in the American colonies in 1612. The colonies were under the command of the British Crown, which did not permit them to levy taxes. But the British did authorize the Virginia Company of London to hold games for its benefit—at least until the scheme backfired. The lotteries drained the Crown's pockets and helped the upstart colonies, and within a decade, the colonists' own domestic lotteries had replaced them. A century later, the colonists held lotteries to raise funds for the WAR OF INDEPENDENCE.

During the eighteenth and nineteenth centuries, lotteries played an important role in building the new nation. Its banking and taxation systems were still in their infancy, necessitating ways to raise capital quickly for public projects. Lotteries helped build everything from roads to jails, hospitals, and industries and provided needed funds for hundreds of schools and colleges. Famous American leaders like THOMAS JEFFERSON and BENJAMIN FRANKLIN saw great usefulness in them: Jefferson wanted to hold a lottery to retire his debts, and Franklin to buy cannons for Philadelphia. Lotteries expanded in the 1800s, prompting Congress in 1812 to authorize them in the District of Columbia. By midcentury, eastern states alone raised over $66 million annually, and lotteries were starting up in the West.

Despite their significance to early U.S. history, lotteries fell out of favor in the late 1800s. Corruption, moral uneasiness, and the rise of bond sales and standardized taxation proved their downfall. Only Louisiana, with a notorious lottery known as The Serpent, still held a state-run game at the end of the century. Congress put a stop to it with the Anti-Lottery Act of 1890 (Act of September 19, 1890, ch. 908, 26 Stat. 465), a federal ban on the use of the mails for conducting lotteries that effectively ended the games for the next seventy years.

New Hampshire swept in the modern era of state-sponsored lotteries in 1964. In 1974 Congress relaxed regulations for the benefit of the growing number of states holding the games (Pub. L. No. 93-583, 88 Stat. 1916 [1975]; H.R. Rep. No. 1517, 93d Cong., 2d Sess. [1974]).