Lottery revenues soared, and state governments started spending more and more on everything from public education to roads. As Cohen writes, “Lotteries proved to be budgetary miracles—the means for states to maintain services without raising taxes.”

In the seventeenth century, the practice spread to the Low Countries, where it became a major source of funding for towns, canals, and other infrastructure projects as well as charities and local wars. The lottery was also a popular way to fund town fortifications and even church and university construction.

Early American state lotteries, like their European counterparts, were based on a similar model. Patrons purchased tickets to be drawn at some future date, usually weeks or months away. However, innovations in the 1970s revolutionized the lottery by adding instant games, allowing players to instantly see whether they had won. This game, modeled on the illegal numbers games ubiquitous in cities at the time, increased patron participation and dramatically boosted revenues.

State lotteries in the era of governmental fiscal crisis were often framed as a response to the burgeoning demands of modern government, but their political appeal stemmed in large part from voters’ aversion to taxation. With no sales or income taxes, state legislatures turned to the lottery to raise money that would allow them to continue providing services without angering their antitax constituents.

As a result, when state legislators promoted the lottery, they typically argued that it would “earmark” proceeds for a particular program, such as public education. This approach, though, hid the fact that earmarked lottery funds still reduce the appropriations that a legislature would have to allot from its general fund for other programs.