Lotteries in the United States explained

In the United States, lotteries are run by 48 jurisdictions: 45 states plus the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.

Lotteries are subject to the laws of and operated independently by each jurisdiction, and there is no national lottery organization. However, consortiums of state lotteries jointly organize games spanning larger geographical footprints, which in turn, carry larger jackpots. Two major lottery games, Mega Millions and Powerball, are both offered in nearly all jurisdictions that operate lotteries, and serve as de facto national lotteries.

In fiscal 2018, Americans spent $77.7 billion on various lotteries, up by about $5 billion from 2017.[1]

History

Historian Neal Millikan using newspaper advertisements in the colonial era found at least 392 lotteries were held in the 13 colonies.[2]

Lotteries were used not only as a form of entertainment but as a source of revenue to help fund the colonies. The financiers of Jamestown, Virginia, for instance, funded lotteries to raise money to support their colony.[3] These lotteries were quite sophisticated for the time period and even included instant winners.[3] Not long after, each of the 13 original colonies established a lottery system to raise revenue.

In the early post-independence era, legislators commonly authorized lotteries to fund schools, roads, bridges, and other public works.[4] Evangelical reformers in the 1830s began denouncing lotteries on moral grounds and petitioned legislatures and constitutional conventions to ban them.[5] Recurring lottery scandals and a general backlash against legislative corruption following the Panic of 1837 also contributed to anti-lottery sentiments. From 1844 to 1859 alone, 10 new state constitutions contained lottery bans. By 1890, lotteries were prohibited in every state except Delaware and Louisiana.[6]

Lotteries in the United States did not always have sterling reputations. One early lottery in particular, the National Lottery, which was passed by Congress for the beautification of Washington, D.C., and was administered by the municipal government, was the subject of a major U.S. Supreme Court decision – Cohens v. Virginia.[7]

The lottery never paid out, and it brought to light the prevalent issue of crookedness amongst the lotteries in the United States. The wave of anti-lottery protests finally broke through when, by 1860, all states had prohibited lotteries except Delaware, Missouri, and Kentucky. The scarcity of lotteries in the United States meant that tickets were shipped across the country and eventually led to the creation of illegal lotteries. In 1868, after years of illegal operation, the Louisiana State Lottery Company obtained a 25-year charter for its state lottery system. The charter was passed by the legislature due to immense bribing from a criminal syndicate in New York. The Louisiana Lottery Company derived 90% of its revenue from tickets sold across state borders. These continued issues of corruption led to the complete prohibition of lotteries in the United States by 1895. It was discovered that the promoters of the Louisiana Lottery Company had accrued immense sums of money from illegitimate sources and that the legislature was riddled with bribery. Before the advent of government-sponsored lotteries, many illegal lotteries thrived, such as number games.

Modern era

The first modern government-run US lottery was established in Puerto Rico in 1934.[8] This was followed, decades later, by the New Hampshire Lottery in 1964.Instant lottery tickets, also known as scratch cards, were introduced in the 1970s and have become a major source of lottery revenue. Individual lotteries often feature three-digit and four-digit games akin to numbers games; a five number game, and a six number game (the latter two often have a jackpot). Some lotteries also offer at least one game similar to keno, and some offer video lottery terminals. Presently, many US lotteries support public education systems.

As of November 2019, lotteries are established in 45 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands; the most recent U.S. state to legalize a lottery is Mississippi, with lottery commission members receiving appointments on October 19, 2018.[9]

The first U.S. multi-state lottery game was formed in 1985 in Maine, New Hampshire, and Vermont; its flagship game remains Tri-State Megabucks. In 1988, the Multi-State Lottery Association (MUSL) was formed with Iowa, Kansas, Missouri, Oregon, Rhode Island, West Virginia, and the District of Columbia as its charter members; it is best known for Powerball, which was designed to create large jackpots. Another joint lottery, The Big Game (now called Mega Millions), was formed in 1996 by six lotteries as its charter members.

As of October 2020, each of the 45 state lotteries offer both Mega Millions and Powerball as a result of a 2009 agreement between the Mega Millions consortium and MUSL to cross-license their game to one another's members, although the two organizations continue to administer Mega Millions and Powerball separately. Mississippi was the most recent to join both, beginning sales in January 2020. Puerto Rico is the only jurisdiction not to offer both, as they do not offer Mega Millions.

State revenues

State lotteries have become a significant source of revenue for states, raising $17.6 billion in profits for state budgets in the 2009 fiscal year (FY) with 11 states collecting more revenue from their state lottery than from their state corporate income tax during FY2009.[10]

Lottery policies within states can have conflicting goals.[11] Given that instructions are passed down from state legislatures, lottery implementation is often expected to be carried out with reduced advertising and funding while still producing the same amount of revenue. This issue led states to look for loopholes in the system. Massachusetts, for example, had its advertising budget dramatically cut, and therefore started using free-play coupons as money to pay for advertising. This led to an IRS investigation into alleged non-reporting of income because the IRS considered the coupons to have monetary value.

States with no lotteries

Among the states that do not have lotteries, Alabama cites religious objections and Utah's state constitution bans all forms of gambling.[12] Nevada's gambling industry has lobbied against a state lottery there, fearing the competition;[13] similarly, the Mississippi Gaming Commission expressed concern that a state lottery would constitute a "competing force" for gambling dollars spent at Mississippi casinos. Despite this, in August 2018, Mississippi passed legislation to create a state lottery. Governor Phil Bryant expressed his support for the lottery to fund transportation in the state and has indicated he will sign the bill. Sales, initially only scratch tickets, began on November 25, 2019. Mega Millions and Powerball tickets became available to the state on January 30, 2020.[14]

Alaska and Hawaii, being outside the contiguous United States, have not felt the pressure of losing sales to competitors. However, in February 2020, Alaska's governor Mike Dunleavy introduced legislation proposing the establishment of an Alaska Lottery Corporation, as part of an effort to overcome a budgetary deficit.[15]

New technologies

In recent years, new applications such as Lotto.com, Lottery.com, and Jackpocket were created for people to purchase state lottery tickets over their smartphones.[16]

U.S. lotteries

State or territoryLotteryYear of
first
ticket sales
Other
joint
games
align=center Alabamaalign=Center Noalign=Center align=Center
align=Center Alaskaalign=Center Noalign=Center align=Center
align=Center American Samoaalign=Center Noalign=Center align=Center
align=Center Arizonaalign=Center Yesalign=Center 1981align=Center 0
align=Center Arkansasalign=Center Yesalign=Center 2009align=Center LFL
align=Center Californiaalign=Center Yesalign=Center 1985align=Center 0
align=Center Coloradoalign=Center Yesalign=Center 1983align=Center LFL
align=Center Connecticutalign=Center Yesalign=Center 1972align=Center LFL
align=Center Delawarealign=Center Yesalign=Center 1974align=Center LA, LFL
align=Center District of Columbiaalign=Center Yesalign=Center 1982align=Center LFL
align=Center Floridaalign=Center Yesalign=Center 1988align=Center C4L
align=Center Georgiaalign=Center Yesalign=Center 1993align=Center C4L
align=center Guamalign=Center Noalign=Center align=Center
align=Center Hawaiialign=Center Noalign=Center align=Center
align=Center Idahoalign=Center Yesalign=Center 1989align=Center LA, LFL
align=Center Illinoisalign=Center Yesalign=Center 1974align=Center 0
align=Center Indianaalign=Center Yesalign=Center 1989align=Center C4L
align=Center Iowaalign=Center Yesalign=Center 1985align=Center LA, LFL
align=Center Kansasalign=Center Yesalign=Center 1987align=Center 2by2, LA, LFL
align=Center Kentuckyalign=Center Yesalign=Center 1989align=Center LFL
align=Center Louisianaalign=Center Yesalign=Center 1991align=Center 0
align=Center Mainealign=Center Yesalign=Center 1974align=Center LA, LFL, TSM
align=Center Marylandalign=Center Yesalign=Center 1973align=Center C4L
align=Center Massachusettsalign=Center Yesalign=Center 1971align=Center LFL
align=Center Michiganalign=Center Yesalign=Center 1972align=Center LFL
align=Center Minnesotaalign=Center Yesalign=Center 1988align=Center LA
align=Center Mississippialign=Center Yesalign=Center 2019align=Center 0
align=Center Missourialign=Center Yesalign=Center 1986align=Center C4L
align=Center Montanaalign=Center Yesalign=Center 1986align=Center LA, LFL
align=Center Nebraskaalign=Center Yesalign=Center 1993align=Center 2by2, LFL
align=Center Nevadaalign=Center Noalign=Center align=Center
align=Center New Hampshirealign=Center Yesalign=Center 1964align=Center LFL, TSM
align=Center New Jerseyalign=Center Yesalign=Center 1969align=Center C4L
align=Center New Mexicoalign=Center Yesalign=Center 1996align=Center LA
align=Center New Yorkalign=Center Yesalign=Center 1967align=Center C4L
align=Center North Carolinaalign=Center Yesalign=Center 2005align=Center LFL
align=Center North Dakotaalign=Center Yesalign=Center 2004align=Center 2by2, LA, LFL
align=Center Northern Mariana Islandsalign=Center Noalign=Center align=Center
align=Center Ohioalign=Center Yesalign=Center 1974align=Center LFL
align=Center Oklahomaalign=Center Yesalign=Center 2005align=Center LA, LFL
align=Center Oregonalign=Center Yesalign=Center 1985align=Center 0
align=Center Pennsylvaniaalign=Center Yesalign=Center 1972align=Center C4L
align=Center Puerto Ricoalign=Center Yesalign=Center 1934align=Center 0
align=Center Rhode Islandalign=Center Yesalign=Center 1974align=Center LFL
align=Center South Carolinaalign=Center Yesalign=Center 2002align=Center 0
align=Center South Dakotaalign=Center Yesalign=Center 1987align=Center LA, LFL
align=Center Tennesseealign=Center Yesalign=Center 2004align=Center C4L, LA
align=Center Texasalign=Center Yesalign=Center 1992align=Center 0
align=Center Utahalign=Center Noalign=Center align=Center
align=Center U.S. Virgin Islandsalign=Center Yesalign=Center 1937align=Center 0
align=Center Vermontalign=Center Yesalign=Center 1978align=Center LFL, TSM
align=Center Virginiaalign=Center Yesalign=Center 1988align=Center C4L
align=Center Washingtonalign=Center Yesalign=Center 1982align=Center 0
align=Center West Virginiaalign=Center Yesalign=Center 1984align=Center LA
align=Center Wisconsinalign=Center Yesalign=Center 1988align=Center 0
align=Center Wyomingalign=Center Yesalign=Center 2013align=Center 2by2, LFL
Key:2by2 = 2by2
C4L = Cash4Life
LA = Lotto America
LFL = Lucky for Life
TSM = Tri-State Megabucks consortium
0 = only multi-jurisdictional games are Mega Millions and/or Powerball

Other joint U.S. lotteries

These games also are offered by multiple lotteries.[17] Some of these games feature a shared progressive jackpot(noted by °):

See also

Further reading

Notes and References

  1. News: Horton . Alex . How Mega Millions and Powerball changed the odds to create monster jackpots . . 2018-10-18 . 2018-10-19 .
  2. Book: Millikan, Neal. Lotteries in Colonial America. 2011. Routledge. 2. 9781136674464.
  3. Web site: History of Gambling in the United States . Roger Dunstan . January 1997 . dead . https://web.archive.org/web/20100910083807/http://www.library.ca.gov/crb/97/03/Chapt2.html . September 10, 2010 .
  4. Book: McMaster, John Bach. A History of the People of the United States: From the Revolution to the Civil War. 1911. Appleton and Company. 588.
  5. Book: Szymanski, Ann-Marie E.. Pathways to Prohibition: Radicals, Moderates, and Social Movement Outcomes. 2003. Duke University Press. 978-0-8223-3169-8. 95–96.
  6. Book: John Houston Merrill. Charles Frederic Williams. Thomas Johnson Michie. David Shephard Garland. The American and English Encyclopædia of Law: Least to Mail. 1890. Edward Thompson Company. 1172.
  7. [Jean Edward Smith]
  8. Web site: Ley Núm. 74 de 2006 -Ley del Programa de Ayuda a Jugadores Compulsivos de Puerto . Lexjuris.com . July 26, 2012.
  9. News: Gov. Bryant appoints MS Lottery Corporation board of directors . Howard . Morgan . wlox.com . 2018-10-22. en-US.
  10. Web site: U.S. lotteries and the state taxman. https://web.archive.org/web/20110718133251/http://blogs.reuters.com/david-cay-johnston/2011/07/15/u-s-lotteries-and-the-state-taxman/. dead. July 18, 2011. July 15, 2011 . Reuters . David Cay Johnston. David Cay Johnston.
  11. Web site: National Gambling Impact Study Commission Lotteries. NGISC. August 3, 1999 .
  12. Web site: Five states that don't have lotteries . July 30, 2019 . Playport . November 26, 2019.
  13. Web site: Knowing Vegas: Why doesn't Nevada have a state lottery? . April 11, 2014 . Las Vegas Review-Journal . January 8, 2020.
  14. Web site: Associated Press. Mississippi lottery bill passes House, headed to governor. August 29, 2018 . WAPT. en. August 29, 2018.
  15. Web site: Governor proposes independent corporation to run an Alaska lottery . Maguire. Sean. ktuu.com. en. 2020-05-26.
  16. Web site: ABC News . September 29, 2015 . Jackpocket App Allows You to Buy Lottery Tickets Using Your Phone.
  17. Web site: Games . Multi-State Lottery Association . May 7, 2016 . https://web.archive.org/web/20160519193522/http://www.musl.com/musl_games.html . May 19, 2016 . dead .