The lottery is unique among gambling games. When you play the lottery, you’re risking a small amount of money against long odds in hopes of financial gain. That’s what makes it gambling. You could describe roulette, craps, and slot machines the same way. What sets the lottery apart is the fact that the game’s net proceeds go toward funding the public good.
The lottery is also unique in its popularity. No other game of chance or skill is as widespread. More than half of all Americans have purchased a lottery product within the past year – no other game comes close in sheer numbers. Americans spend $70 billion a year on lottery tickets, about as much as we spend on liquor and beer. US lottery games are a gambling industry all their own.
In the United States, most lotteries are operated by state governments. At the time of publication, forty-four US states host lottery games, as do the District of Columba, Puerto Rico, and the US Virgin Islands. Forty-two of those states and territories are also members of regional or multi-state games. No national lottery organization, operator, or regulatory body exists; instead, the American lottery industry is a patchwork quilt of state and regional rules and game styles.
The History of the American Lottery
The lottery is one of the oldest forms of gambling still practiced. Historians have dated the earliest-known lottery games to the year 205 BCE in China. Those tickets were likely sold to raise money for the construction of China’s Great Wall. The tradition of governments using lottery sales as a means of fundraising continues to this day – both North Carolina and South Carolina refer to their games as the Education Lottery.
Early US Lotteries
Lotteries hold a prominent place in American history, from colonial days to the modern era. The first English colonies in America were financed almost entirely by lotteries, beginning around the year 1612. The Virginia Company, responsible for much our nation’s early settlement, simply wouldn’t have existed without lottery income. By the 18th Century, lotteries were used to fund the paving of streets, the construction of churches, and the improvement of wharves and other industrial venues. Several buildings at both Harvard and Yale were funded by lottery sales.
The First Prohibition
But prohibition is now and always has been a part of America’s gambling industry. By the 1870s, all state lotteries and most forms of gambling in America had been outlawed. This was a direct result of scandal in the Louisiana lottery system. Accusations of bribery of both state and federal officials were proven true, forcing the federal government to outlaw to forbid interstate shipments or sales of lottery tickets. Because the industry was so dependent on interstate business, the American lottery effectively ended.
The Lottery Lives Again
The revival of American lotteries began in the tiny state of New Hampshire. In 1964, state lawmakers passed a law allowing a statewide lottery. The program was a huge success, and (in a move that would predict the eventual tide of lottery legalization nationwide) inspired a similar law in New York just two years later. As New York goes, so goes New Jersey – that state introduced a lottery in 1970, as a first attempt to use gambling to bolster a struggling economy. By 1975, legal lotteries were offered in twelve US states.
The Modern Lottery
The introduction of instant-win scratch cards in the 1970s altered the lottery landscape. In America, scratch cards are still more popular than the daily or weekly drawing games. Modern scratch cards often have complex layouts, can cost as much as hundreds of dollars, and regularly pay out prizes in the millions. Their ease of use and affordability catapulted them to lottery dominance during the 1980s, and there they sit to this day. How popular are scratch cards? Just one year after their introduction, US lottery sales topped $1 billion for the first time.
Another major innovation occurred in 1985, with the creation of the first multi-state lottery game. The governments of Maine, New Hampshire, and Vermont formed the Multi-State Lottery Association, allowing them to legally advertise and sell tickets across state lines. Eventually, Iowa, Kansas, Missouri, Oregon, Rhode Island, West Virginia, and the District of Columbia joined, and eventually created the ultra-popular Powerball game, designed specifically to create large jackpots and increase individual ticket sales. The introduction of The Big Game (which we now call Mega Millions) occurred in 1996. That game has grown from a network of six states to a conglomerate of forty-two state and territorial lottery systems.
US States with No Legal Lottery
Just six US states and the territory of Guam have no lottery system whatsoever.
The governments of Guam, Alabama, Mississippi, and Utah have resisted the lottery on religious grounds. Utah was essentially founded by high-ranking members of the Mormon Church – members of that faith are discouraged from gambling for reasons of thrift rather than morality. In Guam, Alabama, and Mississippi, a strong tradition of evangelical Christianity is to blame for the prohibition against betting.
Nevada lacks a lottery system due to intense lobbying against a lottery by the state’s powerful legal gaming industry, which fears that lottery games would offer cheap and easy competition for their slot and video poker games. It may seem ridiculous, but you can’t play a legal lottery game in Sin City.
Alaska and Hawaii have resisted the lottery for an entirely different reason. These tourism-dependent states are no doubt concerned about the impact of expanded legal gambling on their bottom line. Also, since they’re remote from the American mainland, they don’t lose money to neighboring lottery programs. That’s been a driving force behind the recent expansion of lottery games into new markets like Wyoming.
US Lottery Basics
American lottery drawings range from simple three-digit games to the complex modern six-digit drawings, usually involving a jackpot bonus or extra ball. Matching different combinations of numbers leads to different payouts. Obviously, the less likely a result, the larger your payout. To date, the largest payout in US history was $1.5 billion, claimed by a Florida couple in January of 2016. At the other end of the spectrum, the smallest possible prize is generally $1, which in the case of a $1 ticket purchase represents a break-even result.
America’s two biggest lottery games are Powerball and Mega Millions. These are massive multi-state games designed to drive up jackpot amounts and increase ticket sales in participating states. Both games premiered in their current incarnations in 1996, in the middle of America’s Lottery Rush.
Powerball is offered in 44 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Powerball is operated by the Multi-State Lottery Association (known as MUSL), a nonprofit group formed by a partnership with state lottery boards. Powerball’s minimum jackpot is $40 million. Winners can choose a lump sum or an annuity payout. Powerball annuities are paid in thirty equal installments on an annual basis.
Powerball drawings have always been held on Wednesday and Saturday nights at 10:59 p.m. Eastern Time. The matrix of balls is a bit complicated – five balls are drawn from a pool of 69, then one powerball is drawn from a pool of 26. The resulting odds of winning the jackpot are 1 in 292,201,338. Each Powerball ticket costs $2, or you can bump it up to $3 with a special Power Play option. No tickets sold after 10 Pm on the night of the drawing will be honored for this week’s contest. Powerball drawings are held at the Florida Lottery’s studio in Tallahassee and broadcast nationwide before the evening news.
Mega Millions (once called The Big Game) is almost identical to Powerball in terms of participation. Every US state or territory where Powerball is available also hosts Mega Millions. The minimum Mega Millions jackpot is $15 million, and winners have the option of choosing an annuity payout (30 payments, increasing by 5% each year) or a lump sum.
US Lottery FAQ
Are lottery games fixed?
The idea that “the fix is in” is one of the most pervasive gambling myths, and it’s been applied to every game under the sun. We’ve heard it all before – that casinos can tighten or loosen slots at their whim, that roulette dealers intentionally rip people off – and it’s all nonsense.
No doubt, some illegal lotteries and scam games have existed and continue to exist. We know that the US lottery system was brought down in the 19th century by cheating scandals. While it has been a problem in the distant past, modern regulations and bookkeeping tactics mean that state-sponsored lottery games are transparent. As for people who take advantage of naïve gamblers? They will always exist. The trick is to learn how to spot them, and avoid them.
If you do business with a legitimate lottery organizer, such as the Multi-State Lottery Association or a branded state lottery organizer, you’ll be playing games that are tested by third-party auditors. Don’t forget, these lottery games are produced by organizations that report to their shareholders and are tasked with maintaining accurate public records.
Aren’t the odds against winning the lottery astronomical?
Of course the odds of winning lottery jackpots are long. So are the odds of getting a royal flush payout on video poker or a single-number win in roulette. Both lotto drawings and scratch card games don’t give you much chance of hitting the big money. For example, the $130 Million Spectacular scratch card from Texas offered a top prize with odds of 1 in 8.1 million. But that same game contained overall winning odds (odds of winning any prize at all, including break-even) of 1 in 2.67. Those break-even and larger prizes are often what serious lottery players are looking for, with big jackpots just a distant vision.
According to the Multi-State Lottery Association, the average scratch-off ticket in the United States gives overall odds of 1 in 3 or 1 in 4, varying a bit by the year in question. But remember, those are break-even averages, including odds for prizes equal to the cost of the ticket. Is it as good a contest as a low-odds casino game like blackjack? No – but the odds of breaking even are such that the lottery can’t be called a poor investment. Not if you play it with common sense.
The work-a-day lottery gamblers aren’t really after those massive jackpots. Obviously, a payout of $130 million would be welcome. But real lottery players realize that those budget-sustaining $50 and $100 prizes are more important than a life-changing single payout. The odds on break-even and other low dollar-amount prizes are such that you can’t really say the odds are astronomical. They’re not that much worse than slot machines, and depending on the game and you willingness to accept a break-even prize, they may actually be a better investment than a pull of a slot machine.
Do lotteries encourage gambling addiction?
This sounds like an argument straight out of Puritan New England. Okay, we get it – three US states object to lottery games on religious grounds. To some people, gambling is immoral. The ghost of that belief exists today as a concern about the impact of the lottery on gaming addiction.
Let’s debunk this one a bit. The first thing we want to point out – lottery organizers in every US state are required to donate a decent portion of their income to research and treatment for gambling addiction. That means the more you play the lotto, the more you’re funding your state’s problem gaming initiatives. But there’s more – lottery industry watchdogs exist for the specific purpose of ensuring that lottery games and advertisements for lottery games don’t actually encourage people to gamble. Advertisements or games that run afoul of these laws are quickly detected and retracted.
What other business is forced to go out of its way to discourage people from taking part? Lotteries are tasked with reducing risky behavior among gamblers. Every US lottery game donates directly to anti-gaming campaigns. The benefits of the lottery to state budgets and anti-gaming programs outweighs any potential risk of encouraging problem gaming.
Isn’t the lottery just a tax on people who can’t do math?
This old joke gets repeated ad nauseum. It’s not even clear who first came up with it. The implication is that anyone who enjoys gambling on the lottery is stupid, or at least bad at mathematics.
Let’s get real honest – all gaming is a risk. The definition of gambling in most US states involves risking something for a potential future gain. Many casino games, almost never the target of these sorts of attacks, give the house a much greater edge than a standard lottery game or scratch card. Our culture tends to paint casino gamblers in a sexy light, depicting them as the ultimate in cool. If the point of gambling is to play games you enjoy, what’s the harm in taking a risk on a lottery drawing?
We’ve found scratch card (instant-win) games with break-even odds as low as 1 in 2.2, that particular number appearing on the game Millionaire’s Club by the Texas Lotto. That gives you a 45% chance of breaking-even, something that most casino games can’t boast of. Sure, other games offer far longer odds, and if you calculate the odds of winning the top prize, the picture looks even worse. Just remember that most lotto players are playing for small wins, not jackpots.
Is there such a thing as the curse of the lottery?
Modern lottery jackpots are getting higher and higher. America’s big multi-state games seem to produce exponentially-larger top prizes over the years. The amount of money handed out by these big jackpot games is life-altering, no doubt about it. For some lottery players, that’s not a good thing. We think the “curse of the lottery” is more a function of socio-economic issues than anything else. Some lottery winners, faced with an unexpected windfall, simply don’t know how to handle being wealthy.
We have a simple solution for this problem. People who win large lottery jackpots need to hire attorneys and accountants, and then follow their advice. Live within your means. Stay away from drugs. In short – don’t be stupid, and a lotto win won’t be a curse.
I’ve never played the lotto before … isn’t it too late to learn?
If you’re unfamiliar with lottery games, the lingo and game names may be intimidating. Also intimidating? The seemingly-random schedule of drawings. So it’s easy for us to understand why a person who’s never played the lottery may feel like they can’t break in.
Just remember that lottery games are the ultimate game of the people. They’re available to the vast majority of Americans at shops and vending machines within a short walk of their front doors. These games are designed to be easy to learn and easy to play. Every US lotto games has instructions and other information printed on the card. Checking for a win is as easy as scanning the tickets’ bar code under a machine, conveniently located at every gas station and grocery store in the country.
Just remember – playing lottery games is easy. Winning big jackpots is not.