Lotteries have been a source of government revenue for centuries

By Wayne Curtis, PhD, former superintendent of Alabama banks, and a retired Troy University business school dean.

The Alabama Legislature has not seen fit to allow the state's citizens to vote on a lottery. Our elected officials proclaim, "Alabama is not ready for a lottery." Or they state, "No one has approached us about a lottery."

Perhaps our legislators need to review the vital role lotteries played in the early development of this nation as well as their importance today in other states. As a recent article published by the Foundation for Economic Education pointed out, lotteries rather than taxation were used as a means of raising revenue from the earliest days of this country. They arose in Europe -- the first to offer cash prizes was Florence, Italy, in 1530 -- and came here with the first settlers.

In 1612, struggling for survival and on the verge of failure, the Virginia Company held a lottery to raise additional funding for the Jamestown settlement. The initial lottery -- 4,000 crowns, a small fortune -- was won by a tailor. Research has shown that some of the lotteries were sophisticated for the times, often featuring instant winners.

Not only did the lotteries save Jamestown from starvation; they also assisted in the survival of the new nation. Not long after declaring independence from the British, each of the 13 original colonies established lotteries to raise revenue for their nascent governments. And lotteries contributed an overwhelming portion of government revenue.

Part of the reason for the popularity of lotteries as a revenue source arose from the aversion of the American people to tax themselves. They had just rebelled against taxation by the British.

In early American history, lotteries were organized to funds schools, roads, bridges, and other forms of infrastructure. The growth of some of the nation's earliest colleges was funded through this means. Princeton, Yale, Harvard, and Dickinson College were among those benefiting from private lotteries.

Public lotteries were sponsored by George Washington to fund roads built in the Shenandoah Valley. In 1820, Congress created a national lottery to raise funds to build Washington, D.C.

By the middle of the 19th century, however, interest in lotteries declined. Many were characterized by corruption; others were opposed on moral grounds. New York and Massachusetts banned them in the 1830s. Ten new state constitutions put in place from 1844 to 1859 prohibited them. And by 1890, lotteries were legal only in Delaware and Louisiana.

Lotteries were not resurrected until the second half of the 20th century -- the first state lottery was established in 1963 -- as a means of raising revenue without taxation. At present, 44 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands have lotteries. Wyoming became the 44th state to have a lottery in 2013.

State lotteries are a significant source of revenue for governments, raising $22.6 billion in profits in 2016 on sales of $80.6 billion. Some states reported more revenue from lotteries than from corporate income taxes.

Only Alabama, Mississippi, Utah, Nevada, Alaska, and Hawaii do not have them. Mississippi and Nevada have casinos and view lotteries as potential competition. Like Alabama, Utah objects to lotteries primarily on religious grounds. There is no legalized gambling in Hawaii; Alaska only allows charitable bingo. Since Alaska and Hawaii have no contingent states with lotteries, they feel no pressure to offer them.

Like most other activities, lotteries have pros and cons -- strengths and weaknesses -- that policymakers should take into consideration. Numerous polls indicate a majority of Alabamians would vote in favor of a lottery. But we will not know if the polls are accurate until a vote of the people is taken.