No one really knows when the lottery started. I for one am willing to bet that gabling and lotteries have been around since the dawn of man. Lets face it you have ever been around a group of guys long enough it is only a matter of time before one of them says "I bet you" and if you noticed I said it in the second line. I would also say it didn't take long before someone said pay me goat or what ever they paid with and you will have a chance to win village.
One of the first recorded winners of the lottery was Moses, in the book of numbers it says that he won a lottery and the prize was land near the river Jordan. All though many scholars disagree on this I for one don't find it that hard to believe. I think the reason there is such a debate on this subject is because some people view the lottery as gambling and for most people the first thought in your mind of a gambler is a broke man gambling his families rent away.
The earliest records of a true documented lottery was in China. The Chinese with their wisdom realized that if they offered prizes to the public for a price then they could actually make money off the people to put towards government projects. It was around 200 BC when Emperor Cheung of the Hun Dynasty created the Chinese lottery known as Keno. Some of the proceeds of this lottery went to fund such projects as the Great Wall.
You don't find much on the lottery after that until 1446 in Europe when a painter offered his paintings in a lottery and the Belgians held lotteries to build chapels and houses for the poor. In 1556 Queen Elizabeth held a lottery that didn't have the drawing until three years later.
The money raised from the lottery was put towards publique good works. The lottery was promoted with scrolls showing pictures of prizes and money received from the lottery was an interest free loan to the government, the ticket rights would then be sold to a broker, the broker would then hire people to sell them. The people hired to sell the tickets would later become stockbrokers.
King James in 1612 give the Virginia Company of London the right to raise money with a lottery and proceeds of which funded the colony at Jamestown in the new world. When the English settled the new land of America they brought the lottery with them. Many people don't know that the lottery played a big role in building America, every thing from libraries to bridges. The foundations of Princeton and Columbia were built by lotteries.
Some of the most important men in American history held lotteries to raise funds for their causes, men like George Washington and Ben Franklin who used the lottery to raise money for cannons in Philadelphia. It wasn't until the end of the Revolutionary war that people started to believe that lotteries were a form of hidden taxes. At this time in America taxes were not an acceptable way to fund public projects, after all that is why we fought for our freedom in the first place.
After the war we had to figure out a way to pay for public projects like Harvard.
Much like anytime there is a wealth of money there is people that find ways to exploit it and the lottery was no different, case in point the Louisiana State lottery that ran from (1868-1892) and as a result around the end of the 19th century the majority of states banned the lottery.
After Benjamin Harrison demanded that congress stop all lotteries the Supreme Court put an end to them in the United States. Like most things made illegal the lottery flourished in underground organizations for years until 1964 when New Hampshire sold the first legal lottery tickets in years. Thus we have the lottery as we know it today.