Lotteries

Lotteries. The word lottery1 has no very definite signification. It may be applied to any process of determining prizes by lot, whether the object be amusement or gambling or public profit. In the Roman Saturnalia and in the banquets of aristocratic Romans the object was amusement; the guests received apophoreta. The same plan was followed on a magnificent scale by some of the emperors. Nero gave such prizes as a house or a slave. Heliogabalus introduced an element of absurdity—one ticket for a golden vase, another for six flies. This custom descended to the festivals given by the feudal and merchant princes of Europe, especially of Italy; and it formed a prominent feature of the splendid court hospitality of Louis XIV. In the Italian republics of the 16th century the lottery principle was applied to encourage the sale of merchandise. The lotto of Florence and the seminario of Genoa are well known, and Venice established a monopoly and drew a considerable revenue for the state. The first letters patent for a lottery in France were granted in 1539 by Francis I., and in 1656 the Italian, Lorenzo Tonti (the originator of “Tontines”) opened another for the building of a stone bridge between the Louvre and the Faubourg St Germain. The institution became very popular in France, and gradually assumed an important place in the government finance. The parlements frequently protested against it, but it had the support of Mazarin, and L. Phelypeaux, comte de Pontchartrain, by this means raised the expenses of the Spanish Succession War. Necker, in his Administration des finances, estimates the public charge for lotteries at 4,000,000 livres per annum. There were also lotteries for the benefit of religious communities and charitable purposes. Two of the largest were the Loteries de Piété and Des Enfans Trouvés. These and also the great Loterie de l’École militaire were practically merged in the Loterie Royale by the decree of 1776, suppressing all private lotteries in France. The financial basis of these larger lotteries was to take 5⁄24ths for expenses and benefit, and return 19⁄24ths to the public who subscribed. The calculation of chances had become a familiar science. It is explained in detail by Caminade de Castres in Enc. méth. finances, ii. s.v. “Loterie.” The names of the winning numbers in the first drawing were (1) extrait, (2) ambe, (3) terne, (4) quaterne, (5) quine. After this there were four drawings called primes gratuites. The extrait gave fifteen times the price of the ticket; the quine gave one million times the price. These are said to be much more favourable terms than were given in Vienna, Frankfort and other leading European cities at the end of the 18th century. The Loterie Royale was ultimately suppressed in 1836. Under the law of the 29th of May 1844 lotteries may be held for the assistance of charity and the fine arts. In 1878 twelve million lottery tickets of one franc each were sold in Paris to pay for prizes to exhibitors in the great Exhibition and expenses of working-men visitors. The first prize was worth £5000; the second, £4000, and the third and fourth £2000 each. The Société du Crédit Foncier, and many of the large towns, are permitted to contract loans, the periodical repayments of which are determined by lot. This practice, which is prohibited in Germany and England, resembles the older system of giving higher and lower rates of interest for money according to lot. Lotteries were suppressed in Belgium in 1830, Sweden in 1841 and Switzerland in 1865, but they still figure in the state budgets of Austria-Hungary, Prussia and other German States, Holland, Spain, Italy and Denmark. In addition to lottery loans, ordinary lotteries (occasion lotteries) are numerous in various countries of the continent of Europe. They are of various magnitude and are organized for a variety of purposes, such as charity, art, agriculture, church-building, &c. It is becoming the tendency, however, to discourage private and indiscriminate lotteries, and even state lotteries which contribute to the revenue. In Austria-Hungary and Germany, for instance, every year sees fewer places where tickets can be taken for them receive licenses. In 1904 a proposal for combining a working-class savings bank with a national lottery was seriously considered by the Prussian ministry. The scheme, which owes its conception to August Scherl, editor of the Berlin Lokalanzeiger, is an endeavour to utilize the love of gambling for the purpose of promoting thrift among the working-classes. It was proposed to make weekly collections from subscribers, in fixed amounts, ranging from sixpence to four shillings. The interest on the money deposited would not go to the depositors but would be set aside to form the prizes. Three hundred thousand tickets, divisible into halves, quarters and eighths, according to the sum deposited weekly, would form a series of 12,500 prizes, of a total value of £27,000. At the same time, the subscriber, while having his ordinary lottery chances of these prizes, still has to his credit intact the amount which he has subscribed week by week.

In England the earliest lotteries sanctioned by government were for such purposes as the repair of harbours in 1569, and the Virginia Company in 1612. In the lottery of 1569, 40,000 chances were sold at ten shillings each, the prizes being “plate, and certain sorts of merchandises.” In 1698 lotteries, with the exception of the Royal Oak lottery for the benefit of the Royal Fishing Company, were prohibited as common nuisances, by which children, servants and other unwary persons had been ruined. This prohibition was in the 18th century gradually extended to illegal insurances on marriages and other events, and to a great many games with dice, such as faro, basset, hazard, except backgammon and games played in the royal palace. In spite of these prohibitions, the government from 1709 down to 1824 annually raised considerable sums in lotteries authorized by act of parliament. The prizes were in the form of terminable or perpetual annuities. The £10 tickets were sold at a premium of say 40% to contractors who resold them in retail (sometimes in one-sixteenth parts) by “morocco men,” or men with red leather books who travelled through the country. As the drawing extended over forty days, a very pernicious system arose of insuring the fate of tickets during the drawing for a small premium of 4d. or 6d. This was partly cured by the Little Go Act of 1802, directed against the itinerant wheels which plied between the state lotteries, and partly by Perceval’s Act in 1806, which confined the drawing of each lottery to one day. From 1793 to 1824 the government made an average yearly profit of £346,765. Cope, one of the largest contractors, is said to have spent £36,000 in advertisements in a single year. The English lotteries were used to raise loans for general purposes, but latterly they were confined to particular objects, such as the improvement of London, the disposal of a museum, the purchase of a picture gallery, &c. Through the efforts of Lord Lyttleton and others a strong public opinion was formed against them, and in 1826 they were finally prohibited. An energetic proposal to revive the system was made before the select committee on metropolitan improvements in 1830, but it was not listened to. By a unique blunder in legislation, authority was given to hold a lottery under an act of 1831 which provided a scheme for the improvement of the city of Glasgow. These “Glasgow lotteries” were suppressed by an act of 1834. Art Unions were legalized by the Art Unions Act 1846. The last lottery prominently before the public in England was that of Dethier’s twelfth-cake lottery, which was suppressed on the 27th of December 1860. As defined at the beginning of this article, the word lottery has a meaning wide enough to include missing-word competitions, distributions by tradesmen of prize coupons, sweepstakes, &c. See Report of Joint Select Committee on Lotteries, &c. (1908). The statute law in Scotland is the same as in England. At common law in Scotland it is probable that all lotteries and raffles, for whatever purpose held, may be indicted as nuisances. The art unions are supposed to be protected by a special statute.

United States.—The American Congress of 1776 instituted a national lottery. Most states at that time legalized lotteries for public objects, and before 1820 the Virginia legislature passed seventy acts authorizing lotteries for various public purposes, such as schools, roads, &c.—about 85% of the subscriptions being returned in prizes. At an early period (1795) the city of Washington was empowered to set up lotteries as a mode of raising money for public purposes; and this authorization from the Maryland legislature was approved by an act of the Federal Congress in 1812. In 1833 they were prohibited in New York and Massachusetts and gradually in the other states, until they survived only in Louisiana. In that state, the Louisiana State Lottery, a company chartered in 1868, had a monopoly for which it paid $40,000 to the state treasury. Its last charter was granted in 1879 for a period of twenty-five years, and a renewal was refused in 1890. In 1890 Congress forbade the use of the mails for promoting any lottery enterprise by a statute so stringent that it was held to make it a penal offence to employ them to further the sale of Austrian government bonds, issued under a scheme for drawing some by lot for payment at a premium (see Horner v. United States, 147 United States Reports, 449). This had the effect of compelling the Louisiana State Lottery to move its quarters to Honduras, in which place it still exists, selling its bonds to a considerable extent in the Southern States.

Since lotteries have become illegal there have been a great number of judicial decisions defining a lottery. In general, where skill or judgment is to be exercised there is no lottery, the essential element of which is chance or lot. There are numerous statutes against lotteries, the reason being given that they “tend to promote a gambling spirit,” and that it is the duty of the state to “protect the morals and advance the welfare of the people.” In New York the Constitution of 1846 forbade lotteries, and by § 324 of the Penal Code a lottery is declared “unlawful and a public nuisance.” “Contriving” and advertising lotteries is also penal. The following have been held illegal lotteries: In New York, a concert, the tickets for which entitled the holder to a prize to be drawn by lot; in Indiana, offering a gold watch to the purchaser of goods who guesses the number of beans in a bottle; in Texas, selling “prize candy” boxes; and operating a nickel-in-the-slot machine—so also in Louisiana; in Massachusetts, the “policy” or “envelope game,” or a “raffle”; in Kentucky (1905), prize coupon packages, the coupons having to spell a certain word (U.S. v. Jefferson, 134 Fed. R. 299); in Kansas (1907) it was held by the Supreme Court that the gift of a hat-pin to each purchaser was not illegal as a “gift enterprise,” there being no chance or lot. In Oklahoma (1907) it was held that the making of contracts for the payment of money, the certainty in value of return being dependent on chance, was a lottery (Fidelity Fund Co. v. Vaughan, 90 Pac. Rep. 34). The chief features of a lottery are “procuring through lot or chance, by the investment of a sum of money or something of value, some greater amount of money or thing of greater value. When such are the chief features of any scheme whatever it may be christened, or however it may be guarded or concealed by cunningly devised conditions or screens, it is under the law a lottery” (U.S. v. Wallace, 58, Fed. Rep. 942). In 1894 and 1897 Congress forbade the importation of lottery tickets or advertisements into the United States. In 1899, setting up or promoting lotteries in Alaska was prohibited by Congress, and in 1900 it forbade any lottery or sale of lottery tickets in Hawaii. In Porto Rico lotteries, raffles and gift-enterprises are forbidden (Penal Code, 1902, § 291).

Authorities.—Critique hist. pol. mor. econ. et comm. sur les loteries anc. et mod. spirituelles et temporelles des états et des églises (3 vols., Amsterdam, 1697), by the Bolognese historian Gregorio Leti; J. Dessaulx, De la passion du jeu depuis les anciens temps jusqu’à nos jours (Paris, 1779); Endemann, Beiträge zur Geschichte der Lottrie und zur heutigen Lotterie (Bonn, 1882); Larson, Lottrie und Volkswirtschaft (Berlin, 1894); J. Ashton, History of English Lotteries (1893); Annual Report of the American Historical Association (1892); Journal of the American Social Science Association, xxxvi. 17.

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1 The word “lottery” is directly derived from Ital. lotteria, cf. Fr. loterie, formed from lotto, lot, game of chance. “Lot” is in origin a Teutonic word, adopted into Romanic languages. In O. Eng. it appears as hlot, cf. Dutch lot, Ger. Loos, Dan. lod, &c. The meaning of the Teutonic root hleut from which these words have derived is unknown. Primarily “lot” meant the object, such as a disk or counter of wood, a pebble, bean or the like, which was drawn or cast to decide by chance, under divine guidance, various matters, such as disputes, divisions of property, selection of officers and frequently as a method of divination in ancient times. From this original sense the meaning develops into that which falls to a person by lot, chance or fate, then to any portion of land, &c., allotted to a person, and hence, quite generally, of a quantity of anything.