Lottery dates back to 1530; New Hampshire establishes first state lottery in 1964

By Rozella Hardin
STAR STAFF
rhardin@starhq.com

   A lottery is a game of chance in which players have an equal opportunity to win prizes. Lotteries have provided entertainment and public funds for centuries. This November, Tennesseans will vote in a referendum whether to change the Constitution to allow a state-sponsored lottery. Forces on both sides are gearing up for a heated battle between now and then.
   The lottery is almost 500 years old, with the first state-organized lottery with cash prizes held in 1530 in Italy. The idea soon spread to England and, in the early 1600s, crossed the Atlantic with the first settlers.
   In America, the first lottery was held in Jamestown in 1612, and provided half the budget for the town's settlers. George Washington used a lottery to support the Revolutionary Army, and Thomas Jefferson used lotteries to fund public projects.
   Before taxation, lotteries were especially popular in the South, like other regions of the country, and used the proceeds to fund construction of bridges, toll roads and schools. From 1790 until the Civil War, lottery proceeds funded the construction of 300 schools, 200 churches, and 50 colleges, including Harvard, Yale and Princeton.
   The first lottery in the colonies began in Massachusetts (1744) because of military debt. The first national lottery was begun by the Continental Congress in 1776 to try to raise funds for the American Revolution. While that did not work well, many smaller public lotteries helped build American universities.
   By the early 1800s, lotteries were very popular, but abuses by private citizens (side betting and heavy ticket markups) prevented the government from getting the profits, and attempts began to outlaw lotteries. In 1827, postmasters were barred from selling lottery tickets. Most of the states adopted anti-lottery laws, and by 1868, Congress declared it unlawful to use the mail for lotteries. The Supreme Court ruled that lotteries had "a demoralizing influence upon the people."
   Modern Lotteries
  
The first modern state-operated lottery was authorized in 1964 in New Hampshire. Proceeds went to support education. Today, lotteries are legally operated in 38 states, plus the District of Columbia, and revenues fund a variety of initiatives, including education, transportation, prison construction, economic development, environment and natural resource programs, and senior citizens centers.
   As the number of lotteries grew, technology has grown to accommodate the industry's expansion. Players now have a choice of various on-line (computerized) games that process and record plays in seconds or instant ticket games that allow them to determine whether they are winners instantly.
   On-line games let players pick from a range of numbers, according to the game's format, and play multiple times for one day or to play a certain number of draws in advance. One play usually costs one dollar. Tickets for on-line games are printed by on-line terminals that are connected to a central computer system that also validates tickets as winner or non-winners.
   In the last 20 years, instant ticket products were introduced adding a whole new dimension of game options. These tickets allow players to scratch a protective coating from a ticket, match the symbols according to the game rules printed on the ticket, and instantly determine if they have won.
   As the industry has continued to grow, multi-jurisdictional alliances have formed to offer players larger prizes. They were designed to offer players an opportunity to win even larger jackpots.
   When New Hampshire instituted the lottery in 1964, it was called a "sweepstakes" and affiliated with horse-racing to avoid the federal anti-lottery laws. Tickets went on sale on March 12, 1964. New York followed in 1967, and New Jersey in 1970. Sales of tickets have jumped from $5.7 million in 1964 to more than $250 million.
   Multi-State Lottery
  
The Multi-State Lottery started with The Lotto American game in February of 1988 and ran for one year. In February of 1989, it was changed to a 6.54 game with two plays for $1. This second version of the game ran until the start of Powerball in 1992.
   Present-day Powerball is made up of 22 states and is a 50 percent prize payout game, which means that 50 cents of every one dollar ticket is paid out in prizes. It holds the record for the largest jackpot. The first Powerball drawing was held on April 22, 1992 at 9:59 p.m. Central Time at ITC Studios in West Des Moines, Iowa. Each Wednesday and Saturday a drawing is still held at the same time and place.
   How Lottery Funds Are Used
  
States use lottery funds for various things. Most are able to justify the lottery by earmarking funds for education.
   The Virginia State Lottery has earned about $2.5 million for the state's treasury since it started in 1988, making it the state's fourth largest source of revenue (trailing only personal, sales and corporate taxes).
   About a third of ticket sales go into the state's general fund for education; lottery players get more than half; lottery retailers get 5 percent; and the rest go for administration.
   In neighboring West Virginia, lottery profits since 1989 have been dedicated to the West Virginia Legislature to specify. Beneficiaries have included senior programs, education and state parks and tourism.
   In Kentucky, lottery proceeds benefit need-based and merit-based college scholarships, adult and early childhood literacy programs, and the state's general fund.
   According to the Georgia Lottery Education Act, which the Tennessee lottery will be patterned after, proceeds from lottery sales are used to solely fund the following educational programs: 1) Tuition grants, scholarships or loans to undergraduate college students and teachers who seek advanced degrees in critical areas of need; 2) Voluntary pre-kindergarten programs; 3) Technology grants to train teachers in the use and application of advanced technology and capital outlay projects for educational facilities.
   (Editor's Note: Next week a look at the Tennessee Lottery Constitutional Referendum.)