Lotteries in the United States

In the United States, lotteries are run by 47 jurisdictions: 44 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.

History

Gambling as a generalization has roots in the United States and other English colonies as far back as the 1600s.^[1] Not every colony allowed gambling, however. The Massachusetts Bay Colony, for example, did not allow cards, dice or gaming tables, even in private residences.^[1] In most colonies however, gambling was seen as a harmless distraction as long as it was played in a gentlemanly manner.^[1]

The acceptance of gambling in the colonies was fairly short-lived by English investors because it was seen as a sign of laziness and as a vice.^[1] The investors saw gambling as a root cause of the colonies' inability to sustain themselves.^[1]

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.^[1] These lotteries were quite sophisticated for the time period and even included instant winners.^[1] Not long after, each of the 13 original colonies established a lottery system to raise revenue.^[1]

In early American history, legislators commonly authorized lotteries to fund schools, roads, bridges, and other public works.^[2] Evangelical reformers in the 1830s began denouncing lotteries on moral grounds and petitioned legislatures and constitutional conventions to ban them.^[3] Recurring lottery scandals and a general backlash against legislative corruption following the Panic of 1837 also contributed to anti-lottery sentiments.^[3] From 1844 to 1859 alone, 10 new state constitutions contained lottery bans.^[3] By 1890, lotteries were prohibited in every state except Delaware and Louisiana.^[4]

Early lotteries

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.^[5]

The lottery never paid out,^[1] 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.^[1] 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.^[1] In 1868, after years of illegal operation, the Louisiana Lottery Company obtained a 25-year charter for its state lottery system.^[1] The charter was passed by the Legislature due to immense bribing from a criminal syndicate in New York.^[1] The Louisiana Lottery Company was a derived 90% of its revenue from tickets sold across state borders.^[1] These continued issues of corruption led to the complete prohibition of lotteries in the United States by 1895.^[1] 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.^[1]

Before the advent of government-sponsored lotteries, many illegal lotteries thrived, such as number games. The first modern government-run US lottery was established in Puerto Rico in 1934.^[6] 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.

Today, lotteries are established in 44 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. The most recent US lottery to be legalized was in Wyoming, where it began operation on July 1, 2013 although tickets were not sold for about a year.^[7]

Some retailers that sit on state lines often offer both state lotteries with state boundaries clearly marked, since such sales still have to occur in the physical state it is offered. One retailer located along U.S. Route 62 that is largely in Sharon, Pennsylvania but has a small portion lying in Masury, Ohio sells both the Ohio Lottery and the Pennsylvania Lottery at one location.^[8]

The first modern US joint-state lottery game was formed in 1985 in Maine, New Hampshire, and Vermont. 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 other lotteries as its charter members.

Today, all 44 individual 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 joint games to one another's members, although the two organizations continue to administer Mega Millions and Powerball separately. D.C. and the U.S. Virgin Islands also offer both games. Only the Puerto Rico Lottery offers only Powerball and not 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.^[9]

Lottery policies within states can have conflicting goals.^[10] 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.^[10] 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.^[10] This led to an IRS investigation into alleged non-reporting of income because the IRS considered the coupons to have monetary value.^[10]

States with no lotteries

Among the states that do not have lotteries, Alabama, Mississippi, and Utah cite religious objections.^[11] Nevada's lucrative gambling industry has lobbied against a state lottery there, fearing the competition;^[12] similarly, the Mississippi Gaming Commission expressed concern that a state lottery would constitute a "competing force" for gambling dollars spent at Mississippi casinos.^[13] Alaska and Hawaii, being outside the contiguous United States, have not felt the pressure of losing sales to competitors.^[11]

New technologies

In recent years, new applications such as Jackpocket were created for people to purchase lotteries over their smartphones.^[14]

U.S. lotteries

Map showing U.S. lottery jurisdictions (in blue) - States highlighted offer Mega Millions and Powerball as of May 15, 2013; the District of Columbia and the U.S. Virgin Islands each also offer both games

Other joint U.S. lotteries

These games also are offered by multiple lotteries.^[15] Some of these games feature a shared progressive jackpot (noted by °):

• 2by2 (3 lotteries) – Kansas, Nebraska, North Dakota
• All or Nothing - Iowa and Minnesota (several other draw games with this name and format are one-state games)
• Cash4Life (8) - Georgia, Indiana, Maryland, New Jersey, New York, Pennsylvania, Tennessee, Virginia
• Hot Lotto° (15) – Delaware, District of Columbia, Idaho, Iowa, Kansas, Maine, Minnesota, Montana, New Hampshire, New Mexico, North Dakota, South Dakota, Tennessee, Vermont, West Virginia
• Lucky for Life (21) - Arkansas, Colorado, Connecticut, Delaware, District of Columbia, Idaho, Iowa, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Missouri, Montana, New Hampshire, North Carolina, North Dakota, Ohio, Rhode Island, South Carolina, Vermont; adding Kansas, West Virginia, and Wyoming (the latter December 4) in 2016
• MegaHits° (video slots; 5) – Delaware, Maryland, Ohio, Rhode Island, West Virginia
• Tri-State Lottery (Megabucks Plus°, Pick 3 (Day & Night), Pick 4 (Day & Night), Fast Play°) - Maine, New Hampshire, Vermont

See also

• Gambling in the United States
• Lottery jackpot records
• Sweepstakes

References