Gambling has been a part of human activity since earliest recorded history, and governments have often attempted to turn that impulse to benefit the state. In the eighteenth century, European governments looked for new sources of money to grow their cities and support colonial expansion around the world. State-licensed lotteries became an increasingly common way for governments and charities to raise money, continuing through the 19th century.
Many earlier lotteries had used an "old style" of payout, with customer names drawn from one bin and slips from another, some listing prizes and others blanks. If there were many players, the drawings could last for weeks.
An innovation in the 18th century was the "Genoese-style lottery." It was based on the method that Genoa used to select certain public officials - drawing five names from a pool of 90 potential participants. Betting was heavy on who would be selected. Innovators realized that the bets could take place even without an election, creating a "number lottery." Prizes were announced before the drawing, rather than reflecting a percentage of ticket sales. Players bought tickets reflecting their choice of up to five potentially winning numbers and then won or lost based on the numbers drawn from the larger set of numbers. The drawing was done in public and was completed quickly. With government guaranteeing the payoff, the risk of default was small. Winning players redeemed their tickets with the ticket seller. If the odds were set correctly, the government could have a long-term expectation of coming out ahead, although unlikely combinations could exceed revenues at any one drawing.
This case study looks at the development of lotteries in the 18th century, and the unexpected impacts that the lotteries had on some of the leading figures of that era. The major tabs and subheads look at the following topics:
- Voltaire - One of the most famous writers and philosophers of 18th century France, Voltaire made his fortune by taking advantage of a miscalculation by the French government in setting the prizes in a 1827 lottery, giving him the capital to support his writings in philosophy and science, fund his associations in aristocratic social circles, and endure occasional periods of exile.
- Casanova - A Venetian writer and bon vivant, Casanova arrived in Paris in 1756 after a spectacular escape from the Venice Inquisition. He convinced French ministers to establish a "number lottery" to support the new and struggling Ecole Militaire. The lottery was a great success. Casanova received support from the king and franchise fees from his lottery sales offices, allowing him the leisure and connections to charm society throughout Europe.
- Lotteries beyond France - Lotteries appeared in China during the Han dynasty, enhanced bonds in the Netherlands, supported the first colonies in the New World, and helped create public works and some of the oldest colleges in the English Colonies, including Yale.
- Winning by the numbers - Data and analysis on the French lottery, from the perspectives of the players and the sponsoring government.
- Probabilities, Risk and the Enlightenment - The 18th century was the Age of Reason and the flowering of the Enlightenment. Mathematicians calculated the odds of winning, although for the most part lottery participants, then as now, seemed to ignore the probabilities.
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Jean Rosenthal and William N. Goetzmann, “Voltaire, Casanova, and 18th-Century Lotteries,” Yale SOM Case 10-030, August 5, 2010
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This Yale School of Management case has been made possible by the generous support of the William J. Poorvu YC ’56 Fund.