Lottery (Ital. lotteria, a game in which the lot, lotto, decides), a sort of gaming contract, by which, for a valuable consideration, one may by favor of the lot obtain a prize of a value superior to the amount or value of that which he risks. In its best and most frequent application, the word describes those schemes of this nature which are conducted under the supervision and guaranty of government, and the proceeds of which are devoted to public objects. Almost all modern states have, at some period of their history, employed lotteries as a means of revenue. But though they supply a ready mode of replenishing the public treasury, they have always been found to exert a mischievous influence upon the people. The poor are invited by them rather than the rich, and are diverted from persistent labor and patient thrift by the hope of sudden and splendid gains; and as it is the professed principle of these schemes to withhold a large part of their receipts, a necessary loss falls upon a class which of all in the community can least afford to bear it. Between the years 1816 and 1828 the French government derived from lotteries an annual income of 14,000,000 francs.
A few years later the government suppressed them, and in the following January 525,000 francs more were found to be in the savings banks of Paris alone than in the same month of the preceding year. In other European states government lotteries are still maintained, and they are defended by the argument that as the passion for play is irrepressible among the people, and their money would otherwise be invested in foreign or in secret and less fairly managed schemes, the state may well assume the conduct of lotteries at home; that under its supervision the evils attendant upon them are diminished, and their earnings are devoted to the public welfare. Similar to the lottery of modern times was the mode sometimes adopted among the Romans in distributing the congiaria among the people; instead of the usual direct donations of corn, wine, and oil, tickets were issued which entitled the holders to various shares in these supplies. A closer resemblance is found in the favorite custom of Augustus, which was imitated by his successors, of distributing at his feasts sealed packets (sortes conviviales), similar in appearance, but containing orders for articles of very different value. The same practice existed among the feudal princes.
In the middle ages the same mode was adopted by the Italian merchants in the disposition of their wares. A money lottery, called the lotto, was instituted at Florence in 1530 for the benefit of the state; and in Venice a half century later lotteries existed under public control. - Two kinds of lottery may be distinguished, the Genoese or numerical, and the Dutch or class lottery. The former originated in Genoa. The election by lot of five members of the grand council afforded the subject of wager. The names of ninety candidates were thrown into a wheel of fortune, and bets were made upon the result of the drawing. Numbers were afterward substituted for the names of the councillors, and the city undertook the direction of the game. The players fixed upon certain numbers, wagering that one, two, or more of them would be drawn among the five, or that they would appear in a certain order. The lottery maintained itself by calculating nicely, according to the doctrine of probabilities, the chances of success, and then adjusting the prizes so as to insure a profit to the bank. The prizes were larger as the chances of success were less; thus in the class of chances which required two out of the five numbers drawn, one ticket in 400 may win.
In Austria, where this sort of lottery is used, the holder is paid with 240 times, and in Bavaria with 270 times the price of his ticket. In the quaterne, which requires four of the five numbers, the probabilities of success are as 1 to 511,038; and the winner receives in Austria 60,000 times, and in Bavaria 64,500 times the value ventured. Out of Italy this sort of lottery was first established in Vienna in 1752, and in Berlin in 1763. The origin of the second kind, the class lottery, has been referred to the Roman congiaria, already mentioned; but with more correctness probably to the lotteries of merchandise established at several places in Europe during the middle ages, and the invention of Italian merchants. In this species, the number and value of the prizes are regularly estimated, all the ticket holders are interested at once in the play, and chance determines whether a prize or a blank shall fall to a given number. The drawing generally takes place at several different times, and the largest prize is withheld till the drawing of the last class.
The lottery is supported by a fixed percentage deducted from each prize. - The first lottery in France was established in 1539. Francis I. gave his assent to it, on condition of a surrender to the crown of a tax on every lot. It received the name of Manque from the white tickets which indicated the blanks. A law promulgated in the 6th year of the republic (1798) prohibited all private or foreign lotteries, and from that date the loteries nationals displaced all others. They were instituted in all the large cities. In 1800 three or four drawings took place every week. This government monopoly lasted till 1836. A law of May 21 of that year abolished all lotteries, and included among them all sales of merchandise or other property, movable or immovable, effected by lot, and all schemes whatever offered to the public in which the lot is the principle of decision. The law confiscates the property offered in the lottery, and enforces severe penalties against its agents and managers, whether the scheme be French or foreign.
Lotteries of personal property, the proceeds of which are to be devoted to charitable objects or to the encouragement of art, may be authorized by government. - In Germany the first class lottery was opened at Nuremberg in 1699. This kind seems to be the one most used in that country at the present time. The lotteries are controlled by government, and their profits applied to the support of workhouses and similar institutions, or to charitable objects. The principle of the system is to return in prizes the money received, deducting a small profit and the cost of management, which discount amounts usually to about 13 per cent. Money lotteries are most frequent, though lotteries of goods are often offered. The latter are very attractive, because each ticket holder receives some prize, though it be of slight value; they require like all others the approval of government. Whole estates, which have become heavily encumbered, have been sometimes offered as prizes. The premium lotteries of Germany are peculiar to that country. Governments issue proposals for loans, offering to capitalists a small percentage upon the amount furnished, by way of interest, and perhaps a like amount in premiums to be awarded by lot.
The hope of winning the prizes secures bidders for the loans at a low return of interest, who would not have supplied the funds at the usual rate. - The earliest English lottery of which there is any record was instituted in 1569. The drawing took place at the west door of St. Paul's cathedral; 40,000 shares were sold at 10s. each. The prizes consisted of plate, and the profits were devoted to the repair of the harbors of the kingdom. During the following century the passion for this sort of gambling rapidly increased, so that in Queen Anne's time lotteries were denounced as "public nuisances." In 1612, by permission of James I., a lottery was drawn for the profit of the Virginia company, and produced about £30,000. The first parliamentary lottery was established in 1709. From this time onward, during the period in which the English state lotteries were carried on under act of parliament, the usual plan was to distribute in prizes of different magnitudes an amount equal to £10 for each ticket; the profit consisted in the advance upon this value paid by contractors, who sold directly to the people, and often by dividing tickets into parts. The prizes were generally funded in annuities.
Thus in 1747, when £1,000,000 was raised by the sale of 10,000 shares, the prizes were paid in perpetual annuities at 4 per cent. In 1778 the number of lottery offices in the whole kingdom was 400. In that year an act was passed obliging every person who kept such an office to take out a yearly license and to pay £50 for it; this measure soon reduced the number from 400 to 41. But the evils which in every country have been found attendant on lottery speculations attracted in 1819 the attention of the English people, and the subject was thoroughly discussed in parliament. The mischievous influences of the system were admitted, but for the time at least all other arguments yielded to that of its necessity as a source of revenue. But in 1823 public sentiment had become so far adverse to the further approval of these institutions, that a lottery was only tolerated in that year because it was to be the last. The act which sanctioned it was accompanied by provisions for the future suppression of lotteries, and for rendering illegal the sale within the kingdom of any tickets or shares of tickets in foreign projects of this character. - In the United States, the lottery has been from the earliest settlement of the country a familiar means of raising funds, which in this country could have been secured in no other mode so easily if at all.
The Virginia company, as has already been mentioned, derived a large profit from English lotteries, and the influence of them extended gradually to the eastern colonies; for it is reported that an assembly of ministers at Boston in 1699 denounced the lottery as "a cheat," and its agents as "pillagers of the people." Generally, however, lotteries enjoyed a fair reputation, and certainly were soon extensively employed throughout the country, for many important and beneficial purposes. Colleges have been founded, roads made, bridges built, ferries improved, and hospitals erected by the aid of lotteries. In 1833 a society was formed in Pennsylvania which advocated their suppression. In July, 1834, the society issued an address to the public, setting forth its objects and views. It is to the efforts of this society that we should mainly attribute the action of most of the states in prohibiting the further establishment of lotteries. In no fewer than 26 of the states the constitution expressly forbids the legisla-lature to authorize them, and the parties concerned in them are in nearly all the states subject to the imposition of heavy penalties. The schemes known as art unions are held to be lotteries by express decisions.
In the language of the court in New York: "These associations distribute a small number of prizes among a great number of persons. The prizes and blanks are drawn in the same manner as in other lotteries. The intention of these schemes is to sell works of art for more than they can be sold for at private sale, and this is to be brought about by an appeal to the universal passion for playing at games of chance. They have all the attributes and elements of lotteries." In most of the states the advertisement of foreign lotteries is made a penal offence; but lotteries are still permitted in Kentucky, and in Louisiana a general law prohibiting lottery companies was superseded in 1868 by an act chartering a company, and giving it an exclusive privilege of selling lottery tickets for 25 years.