A lottery is a popular form of gambling which involves the drawing of lots for a prize. Some governments forbid it, while others endorse it to the extent of organizing a national lottery. It is common to find some degree of regulation of lottery by governments.
The first signs of a lottery trace back to Asia, where ancient Keno slips were discovered. First played in China, the lottery has helped finance major governmental projects like the Great Wall of China.
Lotteries come in many formats. The prize can be fixed cash or goods. In this format there is risk to the organizer if insufficient tickets are sold. The prize can be a fixed percentage of the receipts. A popular form of this is the "50-50" draw where the organizers promise that the prize will be 50% of the revenue. The prize may be guaranteed to be unique where each ticket sold has a unique number. Many recent lotteries allow purchasers to select the numbers on the lottery ticket resulting in the possibility of multiple winners.
Lotteries are most often run by governments or local states and are sometimes described as a regressive tax, since those most likely to buy tickets will typically be the less affluent members of a society. The astronomically high odds against winning have also led to the epithets of a "tax on stupidity" or "math tax." The phrase is largely rhetorical (playing the lottery is voluntary; taxes are not), but it is intended to suggest that lotteries are governmental revenue-raising mechanisms that will attract only those consumers who fail to see that the game is a very bad deal. Indeed, the desire of lottery operators to guarantee themselves a profit requires that a lottery ticket be worth substantially less than what it costs to buy. After taking into account the present value of the lottery prize as a single lump sum cash payment, the impact of any taxes that might apply, and the likelihood of having to share the prize with other winners, it is not uncommon to find that a ticket for a typical major lottery is worth less than one third of its purchase price.
The fact that lotteries are commonly played leads to some contradictions against standard models economic rationality. However, the goal of some players may not be to win the game, but merely to have a thrill and indulge in a fantasy of possibly becoming wealthy. This is particularly popular among those who believe their chances of becoming rich are already zero, so even if the lottery's odds are awful, they are better than zero.
Countries with a national lottery
- Argentina: Quiniela, Loto and various others.
- Brazil: Mega-Sena and various others
- Canada: Lotto 6/49 and Lotto Super 7
- Dominican Republic: leidas,s.a.
- Mexico: Lotería Nacional para la Asistencia Pública
- Puerto Rico: Lotería Tradicional and Lotería Electrónica
- Austria: Lotto 6 aus 45 and Zahlenlotto
- Belgium: Loterie Nationale or Nationale Loterij
- Bulgaria: TOTO 2 6/49
- Croatia: Hrvatska lutrija
- Denmark: Lotto
- Finland: Lotto
- France: La Française des Jeux
- Germany: Lotto 6 aus 49 and Spiel 77 and Super 6
- Greece: Lotto 6/49 , Joker 5/45 + 1/20 and various others
- Hungary: Lottó
- Iceland: Lottó
- Ireland: The National Lottery, An Chrannchur Náisiúnta
- Italy: Lotto, Superenalotto
- Netherlands: Staatsloterij
- Norway: Lotto
- Poland: Lotto
- Portugal: Lotaria Clássica and Lotaria Popular
- Romania: Loteria Romana - 6/49, 5/40, Pronosport
- Serbia: Narodna Lutrija
- Slovenia: Loterija Slovenije
- Spain: Loterías y Apuestas del Estado
- Switzerland: Swiss Lotto
- Turkey: Various games by Milli Piyango İdaresi (National Lottery Administration) including Loto 6/49 and jackpots
- United Kingdom: formerly The National Lottery, now Lotto. Also Monday - The Charities Lottery, launched on May 8, 2006.
- Hong Kong: Mark Six
- Israel: "Lotto"
- Japan: Takarakuji
- Philippines: Lotto 6/42, Mega Lotto 6/45, Super Lotto 6/49, 6 Digits Luzon, 4 Digits, Suertres Lotto, EZ2 Lotto
- Russia: Sportloto
- Singapore: TOTO
- South Korea: Lotto
- Taiwan: Lottery
- South Africa: South African National Lottery
Country Lottery details
Lottery in the United States
In the United States, the existence of lotteries is subject to the laws of each state; there is no national lottery. Before the advent of state-sponsored lotteries, many illegal lotteries thrived; for example, see Numbers game and Peter H. Matthews. The first modern state lottery in the U.S. was established in the state of New Hampshire in 1964; today, lotteries are established in forty-one states and the District of Columbia. On October 8, 1970, New York held the first million dollar lottery drawing.
The first modern interstate lottery in the U.S. was Tri-State Lotto. Tri-State Lotto was formed in 1985 and linked the states of Maine, New Hampshire and Vermont. In 1988, the Multi-State Lottery Association was formed with Oregon, Iowa, Kansas>, Rhode Island, West Virginia and the District of Columbia as its charter members; it is best known for its "Powerball" drawing, which is designed to build up very large jackpots. Another interstate lottery, The Big Game (now called Mega Millions), was formed in 1996 by the states of Georgia, Illinois, Massachusetts, Maryland, Michigan and Virginia as its charter members.
Instant tickets, also known as scratch cards, were first introduced in the 1970s and have since become a major source of state lottery revenue. Some states have introduced keno and video lottery terminals (slot machines in all but name).
Other interstate lotteries include: Hot Lotto, Lotto South, and Wild Card 2.
With the advent of the Internet it became possible for people to play lottery-style games on-line, many times for free (the cost of the ticket being supplemented by merely seeing, say, a pop-up ad). Some of the many websites which offer free games (after registration) include www.iwinweekly.com and the larger iwon.com, which is backed by the CBS broadcasting corporation. GTech Corporation, in the United States, administrates 70% of the worldwide online and instant lottery business, according to its website.
Lottery in Canada
The first lottery in Canada was Quebec's Inter-Loto in 1970. Other provinces and regions introduced their own lotteries through the 1970s, and the federal government ran Loto Canada (originally the Olympic Lottery) for several years starting in the late 1970s to help recoup the expenses of the 1976 Summer Olympics. Lottery wins are generally not subject to Canadian tax, but may be taxable in other jurisdictions, depending on the residency of the winner.
Today, Canada has two nation-wide lotteries: Lotto 6/49 (which started in 1982), and Lotto Super 7 (which started in 1994). These games are administered by the Interprovincial Lottery Corporation, which is a consortium of the five regional lottery commissions, all of which are owned by their respective provincial and territorial governments:
- Atlantic Lottery Corporation (New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador)
- Loto-Québec (Quebec)
- Ontario Lottery and Gaming Corporation (Ontario)
- Western Canada Lottery Corporation (Manitoba, Saskatchewan, Alberta, Yukon Territory, Northwest Territories, Nunavut)
- British Columbia Lottery Corporation (British Columbia)
Lottery in France
The first known lottery in France was created by King Francis I in or around 1505. After that first attempt, lotteries were forbidden for two centuries.
They reappeared at the end of 17th century, as a "public lottery" for the Paris municipality (called Loterie de L'Hotel de Ville) and as "private" ones for religious orders (mostly for nuns in convents).
Lotteries became quickly one of the most important resources for religious congregations in the 18th century.
Lotteries helped to build or rebuild many churches (about 15 including the biggest ones) in Paris during the 18th century, including St Sulpice and Le Panthéon.
At the beginning of the century, the King avoided having to fund religious orders by giving them the right to run lotteries, but the amounts generated became so large that the second part of the century turned into a struggle between the monarchy and the Church for control of the lotteries. In 1774, the Loterie de L'École Militaire was founded by the monarchy (by Mme de Pompadour to be precise, to buy what is called today the Champ de Mars in Paris, and build a Military Academy that Napoleon Bonaparte would later attend) and all other lotteries, with 3 or 4 minor exceptions, were forbidden.
This lottery became known a few years later as the Loterie Royale de France. Just before the French Revolution in 1789 the revenues from La Lotterie Royale de France were equivalent to between 5 and 7% of total French revenues.
Throughout the 18th century, philosophers like Voltaire as well as some bishops complained that lotteries exploit the poor. This subject has generated much oral and written debate over the morality of the lottery.
All lotteries (including state lotteries) were frowned upon by idealists of the French Revolution, who viewed them as a method used by the rich for cheating the poor out of their wages.
The Lottery reappeared in France in 1936, called loto, when socialists needed to increase state revenue. Since that time, La Française des Jeux (government owned) has had a monopoly on most of the games in France, including the lotteries.
Probability of winning
The chances of winning a lottery jackpot are principally determined by several factors: the count of possible numbers, the count of winning numbers drawn, whether or not order is significant and whether drawn numbers are returned for the possibility of further drawing.
In a typical 6 from 49 lotto, 6 numbers are drawn from 49 and if the 6 numbers on a ticket match the numbers drawn, the ticket holder is a jackpot winner - this is true regardless of the order in which the numbers are drawn. The odds of being a jackpot winner are approximately 1 in 14 million (13,983,816 to be exact). The derivation of this result (and other winning scores) is shown in the Lottery Mathematics article.
To put these odds in context, suppose one buys one lottery ticket per week. 13,983,816 weeks is roughly 269,000 years; In the quarter-million years of play, one would only expect to win the jackpot once.
The odds of winning any actual lottery can vary widely depending on lottery design. "Powerball" is a very popular multistate lottery in the United States which is known for jackpots that grow very large from time to time. This attractive feature is made possible simply by designing the game to be extremely difficult to win: 1 chance in 146,107,962. That's over ten times smaller than the example above. Powerball players also pick six numbers, but two different "bags" are used. The first five numbers come from one bag that contains numbers from 1 to 55. The sixth number -- the "Powerball number" -- comes from the second bag, which contains numbers from 1 to 42. To win a powerball jackpot, a player's five regular numbers must match the five regular numbers drawn and the Powerball number must match the Powerball number drawn. In other words, it is not good enough to pick 10, 18, 25, 33, 42 / 7 when the drawing is 7, 10, 25, 33, 42 / 18. Even though the player picked all the right numbers, the Powerball number at the end of the ticket doesn't match the one drawn, so the ticket would be credited with matching only four numbers (10, 25, 33, 42).
Most lotteries give lesser prizes for matching just some of the winning numbers. The Powerball game described above is an extreme case, giving a very small payout (US$3) even if a player matches only the Powerball number at the end of your ticket. Matching more numbers, the payout goes up. Although none of these additional prizes affect the chances of winning the jackpot, they do improve the odds of winning something and therefore add a little to the value of the ticket.
The expected value of lottery bets is often notably bad. In the United States, an expected value of -50% is not atypical. This has led some people to deride lotteries as "the math tax" or a "tax on stupidity."
|$365m (€306m, £210m)||Powerball||United States||One ticket bought jointly by eight co-workers at a Nebraska meat processing plant||18 February 2006||World's largest lottery jackpot prize|
|$363m (€291.21m, £200m)||The Big Game||United States||Two winning tickets: Larry and Nancy Ross (Michigan), Joe and Sue Kainz (Illinois)||9 May 2000||The Big Game is now named Mega Millions|
|€183m ($220m, £124.8m)||EuroMillions||France(2), Portugal(1)||Three ticket holders||3 February 2006||Europe's largest jackpot|
|€115m ($142.4m, £77m)||EuroMillions||Ireland||Dolores McNamara||29 July 2005||Europe's largest single winner|
|£42m (€60.3m, $74.7m)||National Lottery||United Kingdom||Three ticket holders||6 January 1996||Largest UK prize|
|£20.1m (€28.8m, $35.7m)||National Lottery||United Kingdom||Iris Jeffrey||14 July 2004||Biggest single winner (UK)|
|$850,000||Powerball||United States||Senator Judd Gregg||20 October 2005||Famous person|
On 20 September 2005 a primary school boy in Italy won £27.6 million in the national lottery. Although children are not allowed to gamble under Italian law, children are allowed to play the lottery. 
Payment of prizes
Winnings are not necessarily paid out in a lump sum, contrary to the expectation of many lottery participants. In certain countries, such as the USA, the winner gets to choose between an annuity payment and a one-time payment. The one-time payment is much smaller, indeed often only half, of the advertised lottery jackpot, even before applying any withholding tax to which the prize may be subject. The annuity option provides regular payments over a period that may range from 10 to 40 years.
In some online lotteries, the annual payments can be as little as $25,000 over 40 years, with a balloon payment in the final year. This type of installment payment is often made through investment in government-backed securities. Online lotteries pay the winners through their insurance backup. However, many winners choose to take the lump-sum payment, since they believe they can get a better rate of return on their investment elsewhere.
In some countries, lottery winnings are not subject to personal income tax, so there are no tax consequences to consider in choosing a payment option. In Canada and Australia, all prizes are immediately paid out as one lump sum, tax-free to the winner.
Scams and Frauds
Lottery like any mechanism is susceptible to fraud despite the high degree to scrutiny offered by the organisers. One method involved is to tamper the machine used for the number selection. By rigging a machine it is theoretically easy to win a lottery. This act is often done in connivance with an employee of the lottery firm. Methods used vary; loaded balls where select balls are made to popup making it either lighter or heavier than the rest. Many other ingenious methods too have been employed.
Some scams on the internet too are based on lotteries. The modus operandi of this fraud is the trickster sends spam to all email users in their database congratulating them on their recent lottery win. Then they proceed to announce that in order to release funds they must part with a certain amount (as tax/fees) as per the rules or risk forfeiture. Some unsuspecting users might fall prey to this scandal and part with their money falling into their trap, where they continue to pay as they are misled by the scamsters who dupe their clients into believing that they are always one step closer to the money. The swindlers also might use telephone or printed letters to approach victims to execute their plan more professionally.
Another form of lottery scam involves the selling of "systems" which purport to improve a player's chances of selecting the winning numbers in a Lotto game. These scams are generally based on the buyer's (and perhaps the seller's) misunderstanding of probability and random numbers.
- anti lottery course Professor dashes dreams with anti lottery course
- Rotten Library Article on Lottery Winners
- Lotteries are another state tax - but with better marketing One of a few Tax Foundation articles concerning the truth about lotteries
- Lotto Scams: Crooked game and useless systems