The Use and Abuse of Lotteries as a Revenue Source.
word "lot," from which the name lottery is derived, originated from the Teutonic word "hleut," and was used to designate an object such as a disk, pebble, or bean that was drawn or cast to decide disputes, divide property, settle uncertain matters, or determine winners in games of chance.1 Accordingly, lottery gambling is a distribution scheme by lot or chance, a game of hazard in which consideration is ventured for the chance at obtaining a prize.2 Lots have been in use from time immemorial. Archaeologists in Egypt found artifacts used in gaming from as early as 3500 B.C. Also, the use of lots for determining the distribution of property is traceable to biblical times as first appears in the book of Numbers of the Old Testament where it is written that Moses apportioned the land west of the Jordan to the twelve tribes of Israel on the basis of lots.3 In Acts of the New Testament, the casting of lots was used to determine who should replace Judas Iscariot as an apostle.4 Also, lotteries were used extensively by the Romans, including Emperors Nero and Augustus, to give away slaves and gifts during Saturnalias feasts and other banquets.5 Furthermore, Italian merchants used the lottery to distribute prizes and dispose of unsold merchandise during the Middle Ages. Some historians propose that the first public lottery was held in the French town of L'Ecluse in 1420 to raise funds for fortifications;6
Economic Background for Gambling Policy
Legalized gambling as a revenue source is evaluated on the basis of data derived from a nationwide survey. The major findings include: (1) gambling is essentially a consumer commodity which people purchase because they enjoy it, rather than because they expect to make money; (2) maximum revenue potential depends on consumer responsiveness to the price of a given game; (3) high take-out rates encourage gamblers to participate in illegal substitutes; (4) state receipts from gambling, regardless of the details of the way they are collected, are economically identical to any other form of excise tax; (5) although gambling outlays tend to increase with income, the amount of increase is disproportionate to the amount of income, and therefore gambling tends to be a highly regressive form of taxation; and (6) the maximum revenue which states could expect to collect as the result of legalizing gambling is about a 4 percent addition to total receipts from other sources of revenue.
The Impact of Legalization on Illegal Gambling Participation
This paper examines the effects of legalization on illegal gambling participation using a multivariate analysis to adjust for the influence of demographic variables. In addition, the incidence of illegal gambling in a nationwide sample was compared with the incidence reported by Nevada residents. Games with similar structures and psychological characteristics appear to be complementary. That is, people who participate in one tend to participate in the other as well, regardless of their legal status. Dissimilar games operate as substitutes for each other.