Lotteries in the United States may seem like a recent fad, but they date back at least as far as the 1700s. The original 13 colonies were financed with the help of lottery dollars, and the U.S. government used them to help pay for the Revolutionary and Civil Wars. Even the Ivy League universities – Harvard, Yale, and Princeton – used lotteries to get started.
State lotteries didn’t begin until the 1960s. The first, a $100,000 sweepstakes tied to a horse race, was held in New Hampshire in 1964. Today, at least 30 states have lotteries, which generate $17 billion a year in revenues.
According to Consumer’s Research magazine, lotteries have the worst odds of any form of legalized gambling. In terms of average payout, the highest percentage is craps (98%), followed by roulette (95%), slots (75%-95%), jai alai (85%-87%), and the race track (83%-87%); the lottery is last (49%). Only 0.000008% of the 97 million people who play the lottery annually win a million dollars.
Lotteries with the best odds (1990 stats): Delaware, Maryland, Michigan, Pennsylvania, and Washington, D.C. The odds of winning their jackpots are 1 in 1,000. Worst odds: California and Florida. There odds are 1 in 14 million.
How much is a $1 million lottery prize really worth? The IRS deducts 20% automatically, state and local taxes are also taken out, leaving about $560,000. The state pays the first $50,000 in cash, but pays the rest over 20 years, reducing the value by another $100,000. A $1 million prize is worth about $468,000.