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The earliest public lotteries were a form of “voluntary taxes,” and the American colonies had several, including Harvard, Dartmouth, Yale, King’s College (now Columbia), Union and Brown. In the nineteenth century, private promoters marketed public lotteries to raise money for everything from buying a battery of guns for Philadelphia to rebuilding Faneuil Hall in Boston.
In the immediate postwar era, government-run lotteries began in Northeastern states with bigger social safety nets that maybe needed a little extra revenue. The idea was that lotteries would help float the state budget without rousing an anti-tax backlash from voters.
But it turned out that the money raised by the lottery was just a drop in the bucket for actual state government, and, by some estimates, as small as 2 percent of total state revenues. So lottery commissioners started promoting two messages mainly: one was that the game was so wacky and weird that it was fun, which obscured its regressivity; the other was that playing was an inexpensive way to enjoy life.
As the late twentieth-century tax revolt accelerated, legalization advocates, no longer able to argue that the lottery was a silver bullet, began casting around for other strategies to solve state budget crises that wouldn’t enrage anti-tax voters. They began to claim that the lottery would fund a single line item, invariably education, but also sometimes elder care, public parks, and veteran services.