Select Committee on Culture, Media and Sport First Report



Historical perspective

7. Many prominent historical figures including Augustus Caesar, Casanova and Thomas Jefferson have supported lotteries to raise money for public projects. England's first state lottery was introduced in 1569. By the nineteenth century, state lotteries had fallen out of favour in the United Kingdom. In 1808, a Select Committee of this House argued that:

"No mode of raising Money appears to Your Committee so burdensome, so pernicious, and so unproductive; no species of adventure is known, where the chances are so great against the adventurer, none where the infatuation is more powerful, lasting, and destructive."[25]

That Committee's view was accepted, and the last national lottery in the United Kingdom for 100 years was held in 1826.

8. The prohibition on lotteries was removed by the Betting and Lotteries Act 1934, which allowed certain small lotteries to operate. In 1978, the Royal Commission on Gambling concluded that a National Lottery would not necessarily be socially harmful.[26] That Report argued in favour of proceeds going to fund good causes, and stated: "The proceeds of a national lottery should not only be allocated outside the normal Government machinery: they should be immune, subject to annual scrutiny by Parliament, from Government influence".[27] A number of unsuccessful private Members' Bills were tabled after that Report to establish a National Lottery.[28]

Development of lottery games

9. The introduction of a state lottery in New Hampshire, in 1964, established the model for modern public lotteries in the United States.[29] State lotteries are regulated by state governments, which operate, and are sole beneficiaries of, the lottery. Federal regulation of lotteries in the United States is limited to a prohibition on inter-state advertising and selling of lottery tickets. The New Hampshire State Lottery was launched with a passive draw, which was essentially a raffle, in which players could not choose their own numbers.[30] Technological innovations have enabled lotteries in the United States to develop. The first such innovation, in the early 1970s, was Instants, in which the player scratches off a latex panel on a paper ticket to reveal numbers or words that show whether the ticket is a winning one. The game offered immediate gratification, and usually an instant cash payout of prize money. New ticket designs are regularly introduced to maintain player interest. Instants tickets are popular with operators because they can be sold easily in vending machines.

10. The second innovation was a computerised imitation of the illegal daily numbers games that had been popular in many cities. This game allowed players to choose their own three- or four-digit numbers, which were recorded online through a terminal and logged through a communications network on the lottery's main computer.[31] In the early 1980s, the numbers games spawned Lotto, the game most closely associated with state lotteries. Lotto also allowed players to select their own numbers, which were registered online. The United Kingdom National Lottery is an online Lotto game in which players select six numbers from a matrix of 49 (6/49). Lotto games have numerous permutations of numbers selected and matrix size, which affect the odds of the game. However, it should not be forgotten that when comparing game designs and the size of matrix with lotteries in the United States the picture is complicated because players there are able to buy tickets in neighbouring lotteries.

11. Lotto games are usually "parimutuel", in that the game design has a prize structure based on predetermined proportions of the prize fund. A non-parimutuel game guarantees a set prize irrespective of the number of tickets sold. The prizes for matching four or more numbers on the United Kingdom National Lottery are parimutuel, but the prize for matching three numbers is now set at £10. The United Kingdom National Lottery also includes Thunderball, which has fixed, rather than parimutuel, prizes, and Lottery Extra which is a parimutuel jackpot-only game.[32]

12. Another game introduced in the United States was an electronic version of Keno, which was originally a casino game but is now typically played in bars, bowling alleys and diners.[33] Similarly to Lotto, but with much more frequent draws, its players decide how many numbers to select from a large matrix, and that selection is registered online. The Keno format varies between States. In Maryland, it is played using a matrix of numbers from 1 to 80. The player selects up to 10 numbers from that matrix. The lottery computer chooses 20 winning numbers from 1 to 80 every five minutes, and the numbers are displayed on the Keno terminal monitor.[34]

13. The most recent and controversial innovation is electronic gambling through video lottery terminals (VLTs), which can be programmed to carry a wide variety of games such as video poker. Like conventional slot machines, they offer players the chance to play a game and receive immediate payouts of winnings. The near immediate gratification of "fast" games, such as Instants, Keno and VLTs, has led to their description as "harder" gambling, as opposed to the "softer" Lotto games that are usually drawn only twice a week.

25  Laws relating to Lotteries, Second Report from the Select Committee with Appendix, 1808 (323) Vol II pp 11-12 republished in British Parliamentary Papers IUP series: Social Problems-Gambling (2): Reports from Select Committees ... 1808-98, pp 19-20. Back

26  Royal Commission on Gambling (Rothschild Report), Cmnd 7200, July 1978. The Rothschild Report provides, for those interested, a useful historical background to lotteries in this country, pp 164-171; also see R Munting, An economic and social history of gambling in Britain and the USA, Manchester UP, 1994; and The Economic Value and Public Perceptions of Gambling in the UK, Business in Sport and Leisure, May 2000, pp 15-30. Back

27  Cmnd 7200, July 1978, p 226. Back

28  Lotteries Bill 1988-89, National Lottery Bill 1989-90, National Lottery Bill 1991-92. Back

29  A history of the evolution of lottery games in the United States is included on the web site provided by the National Gambling Impact Study Commission,, also see R Munting, An economic and social history of gambling in Britain and the USA, Manchester UP, 1994. Back

30  See State Lotteries at the Turn of the Century: Report to the National Gambling Impact Study Commission, April 23, 1999. Back

31  See Evidence, p 77, footnote 4. Back

32  Evidence, pp 5-6, 103-105. Back

33  There are two forms of Keno; regular Keno, which is drawn once or twice weekly, and fast draw Keno, which is typically drawn every five minutes. Regular Keno has largely been displaced by fast draw Keno in state lotteries. See La Fleur's 2000 World Lottery Almanac, TLF Publications, 2000, for more information on the product mix of state lotteries.  Back

34  See the web site provided by the Maryland State Lottery,, for a fuller description of lottery games offered by that State. Back

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