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Five states — Alabama, Alaska, Hawaii, Nevada, and Utah — do not have lotteries. The other 45 plus the District of Columbia, Puerto Rico, and the U.S. Virgin Islands depend upon lotteries as a source of revenue.
People generally do not understand the vital role lotteries played in the early development of this nation as well as their importance today in other states. Lotteries rather than taxation were used as a means of raising revenue from the earliest days of this country.
In 1612, struggling for survival and on the verge of failure, the Virginia Company held a lottery to raise additional funding for the Jamestown settlement. Not only did the lotteries save Jamestown from starvation; they also assisted in the survival of the new nation. Not long after declaring independence from the British, each of the 13 original colonies established lotteries to raise revenue for their nascent governments. Lotteries contributed an overwhelming portion of government revenue.
Part of the reason for the popularity of lotteries as a revenue source arose from the aversion of the American people to tax themselves. They had just rebelled against taxation by the British.
In early American history, lotteries were organized to funds schools, roads, bridges, and other forms of infrastructure. The growth of some of the nation’s earliest colleges was funded through this means. Princeton, Yale, Harvard, and Dickinson College were among those benefitting from private lotteries.
Public lotteries were sponsored by George Washington to fund roads built in the Shenandoah Valley. In 1820, Congress created a national lottery to raise funds to build Washington, D.C.
By the middle of the 19th century, interest in lotteries declined. Many were characterized by corruption; others were opposed on moral grounds. By 1890, they were legal only in Delaware and Louisiana.
Lotteries were not resurrected until the second half of the 20th century — the first state lottery was established in 1963 — as a means of raising revenue without taxation.
State lotteries are a significant source of revenue for governments, generating $94.9 billion in 2021. Some states reported more revenue from lotteries than from corporate income taxes.
Like most other activities, lotteries have pros and cons — strengths and weaknesses — that policymakers should take into consideration. Numerous polls indicate a majority of Alabamians would vote in favor of a lottery. Moreover, Gov. Ivey’s Study Group on Gambling Policy estimated that Alabama could raise $510 million to $710 million annually from a lottery, casinos, and sports betting.
Wayne Curtis, former superintendent of Alabama banks, is a retired Troy University business school dean. Email him at wccur-