The casting of lots to determine fates and distribute property has a long record, with several examples in the Bible. Public lotteries, however, are more recent. The first was probably a private lottery in the 13th century, but the first state-sponsored lotteries are known only from the 17th century, when they began to appear in England and then in the American colonies.
Some states have created public lotteries to raise money for projects that might otherwise be insufficiently funded, such as a new road or a bridge. Others have established them to subsidize favored programs and services, such as education or health care. In some cases, the money raised by these lotteries is used for gambling, and critics say that it leads to addictive behaviors.
In most states, a significant portion of the lottery revenue is earmarked for government spending. For example, a percentage of the proceeds may be used to support seniors or to fund construction projects. In addition, many state governments require upfront income tax withholding on winnings and may have top marginal rates that exceed 10%.
In the early years of the American lottery, public enthusiasm grew along with the popularity of games. State officials argued that the games would help governments expand their array of services without raising taxes too much, and voters agreed. Over time, though, this dynamic has become less clear-cut. Lottery revenues have not increased proportionally with state budgets, and many of the services that are supported by state lottery funds remain in great need.