Raising Funds Through the Lottery
Throughout the history of the lottery, various governments have used it as a way to raise funds. Whether for the purpose of financing a government project, a college or university, military conscription, or the allocation of scarce medical treatment, the lottery has proved to be an effective way to raise money.
Historically, lotteries have been known for their ability to provide large cash prizes. Typically, lottery tickets are sold for a small fee, and the bettor chooses a series of numbers, which are then randomly selected. The bettor may also buy a numbered receipt for the ticket, which is deposited with the lottery organization. The bettor later determines if the ticket was among the winners, and may receive a portion of the prize, or a lump sum.
Depending on the jurisdiction, taxes can be withheld from the winnings. This is generally based on the investment, and can vary considerably. However, as a rule of thumb, the amount of income tax applied to a winning lottery is less than the advertised jackpot, assuming the time value of money is considered.
The earliest known record of a lottery is a lottery held by the Roman emperor Augustus. According to this record, a group of wealthy noblemen distributed tickets with prizes of unequal value during Saturnalian revels. Other early records indicate that towns in Flanders and Burgundy held public lotteries to raise money for defenses and the poor.
The first modern European lotteries were held in Genoa and Modena in the 15th century. In both cities, a group of wealthy noblemen distributed a set of lottery tickets to guests at dinner parties. In 1627, a series of lotteries were licensed to raise money for the construction of an aqueduct in London.
In the United States, the Louisiana Lottery was the last state lottery until 1963, but it was plagued with corruption and bribery. Agents were located in every city in the U.S., and the lottery generated enormous profits for promoters. In fact, the prize money was so large that it was said to be the equivalent of US$170,000 today.
In 1755, the Academy Lottery financed the University of Pennsylvania. The same year, the Commonwealth of Massachusetts raised money with a lottery for an expedition against Canada. In 1869, the Louisiana Lottery was the most successful in the U.S., with a prize of $250,000 a month.
Although these games have proven to be an effective way to raise money, the abuses of the lottery have weakened its arguments. The Chinese Book of Songs mentions a game of chance as “drawing of wood.” In the Roman Empire, emperors and towns used lotteries to give away property and slaves, and to sell products. In ancient Rome, the popular dinner entertainment was apophoreta, which was a kind of lottery.
While there are many uses for lotteries, the most basic uses are for gambling and the selection of jury members from registered voters. Usually, a lottery’s total value is the amount of money raised, plus taxes and other revenues.