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The word “lottery” derives from the Dutch noun lot, meaning “fate.” The English first used the term in the 16th century. Historically, the Dutch organized public lotteries to raise money for a variety of purposes, from building town fortifications to aiding the poor. Similarly, in colonial America, lotteries were commonly used to finance public works projects, including paving streets and building wharves. Benjamin Franklin even sponsored a lottery to raise funds for cannons to defend Philadelphia against the British.
In modern times, state lotteries have typically been financed by taxing players through the purchase of tickets. State governments have argued that lotteries are a painless form of taxation, since players voluntarily spend their money rather than be coerced by the government. Once a lottery has been established, revenues typically expand dramatically after the first year of operation, then level off or decline (due to what is known as “boredom”). As a result, lotteries must continually introduce new games to maintain or increase their revenues.