Federal Lottery Laws


Lottery is a form of gambling where participants compete against each other for a prize. Many states use the proceeds from lottery games to fund public projects and programs. Some even use the funds to combat gambling addiction.

Lottery players are disproportionately low-income, less educated, and nonwhite. Nonetheless, they spend an enormous amount of money on tickets.


Lottery has been around for centuries and is a popular form of gambling. It is a game in which players purchase numbered tickets and hope to win a prize based on luck. It is also a common source of income for states and communities. People gamble in all kinds of ways, but lottery tickets have the highest odds of winning. The name “lottery” is believed to be derived from the Dutch word lot, which means fate.

The first modern public lotteries appeared in 15th-century Burgundy and Flanders, where towns wished to raise money for civic projects and the poor. Augustus Caesar held a lottery for municipal repairs in Rome, and George Washington used a lottery to help fund Yale and Harvard. Lotteries are a great way to raise funds for important projects without burdening taxpayers with onerous taxes.


Lotteries are used to distribute scarce resources, such as housing units in a new complex or kindergarten placements. They also can be used to raise funds for public goods or services. In the past, Benjamin Franklin ran a lottery to raise money to purchase cannons for Philadelphia, and George Washington advertised land and slaves in the Virginia Gazette.

Lottery games are designed to maximize the total amount of profit, with a minimum risk of losing tickets. However, players do not always select all possible combinations with equal probability. This skewness leads to more rollovers, which increase ticket sales and profits.

State lotteries are exempt from truth-in-advertising laws, and can promote the dream of winning big prizes while downplaying the odds and risks. These tactics appeal to people in low-income neighborhoods, who spend much more on lottery tickets than the average person.


In the US, federal and state taxes apply to lottery winnings. In addition, the winner must file a tax return for the year in which they win. In some cases, the amount of the prize may bump winners into a higher tax bracket.

The tax rates vary across states, but New York is among the harshest, withholding 24% of each payment and charging city and Yonkers residents an extra 8.82%. The taxes also differ if you choose to receive your winnings as annuity payments or a lump sum.

It is recommended that you consult a financial or tax advisor before claiming your prize. This person can help you understand the impact of your windfall and find ways to minimize your taxes. For example, some experts recommend taking a lump-sum payment and investing the money in higher-return assets.


Many critics contend that lotteries promote addictive gambling behaviors and are a major regressive tax on poorer communities. They also argue that state officials face an inherent conflict between their desire to increase revenue and their duty to protect the public welfare.

The Director may issue special licenses for the sale of lottery products at public events that are of short duration and limited geographic scope, such as State and county fairs, ethnic festivals, and street fairs. Upon granting a special license, the Director shall consider all applicable security aspects of lottery operations.

Applicants for a special license must submit an application and provide the Director with all of the following information:


Lottery laws are complex, and violating them can result in serious federal criminal charges. A skilled attorney can help you defend yourself against these charges. If you are facing a federal lottery crime, contact a lawyer immediately.

The Governor may appoint an advisory board composed of ten lottery retailers to provide advice on retail aspects of the lottery. This board must represent the broadest possible geographic, racial, and gender representation of lottery retailers. The Governor also appoints the chairman of the board.

A person must not buy or sell a lottery ticket or share if he knows or has reason to believe that the ticket or share is counterfeit, defaced, forged, or otherwise misrepresented. This violation is a Class A felony.