Lottery Innovations

The casting of lots to determine fates has a long history in human society and is documented in the Bible. But state-sponsored lotteries are more modern, dating back only to the late 17th century when King James I of England created the first one in order to fund his colony at Jamestown in Virginia. Despite the long-held opposition of conservative Protestants, lotteries soon found widespread acceptance and became a vital part of the new nation. Lotteries raised money for towns, wars, colleges and public-works projects. In fact, many of the nation’s first church buildings and some of its most prestigious universities were funded by lottery revenues.

Today’s lotteries are a business, and their profits depend on a consistent base of regular players. To attract and retain this base, lotteries must constantly introduce new games that seem appealing to a broad range of potential players. This constant innovation is a direct response to market forces: lotteries face competition from other forms of gambling and must continually innovate to stay competitive.

Historically, state lotteries were based on traditional raffles in which the public bought tickets to a future drawing at some unspecified date weeks or months away. But with innovations in the 1970s, lotteries began offering instant games in the form of scratch-off tickets. These games offered lower prize amounts and much higher odds, on the order of 1 in 4. These tickets proved very popular. They were easy to buy, and they appealed to people who wanted a quick, easy, and fun experience.

Lottery commissions quickly realized that these games required a different marketing strategy. Instead of promoting the fact that they were a great way to raise funds for education, they focused on the idea that winning a lottery ticket was a chance to become wealthy in a matter of minutes. In addition, they marketed the concept of jackpots as a way to make the lottery appear newsworthy and exciting. Super-sized jackpots, when they do occur, are a major driver of lottery sales and give the game free publicity on television and radio.

While the growth of lotteries was driven by market forces, states’ desire to increase revenue remained a significant factor. Despite their reliance on an anti-tax message, state governments have a strong incentive to keep the lotteries going and even to expand them, since they provide painless income streams during periods of economic stress. As a result, state lotteries enjoy broad public approval, regardless of the actual fiscal conditions of their governments.