The official lottery, operated by a state government, raises money for specific projects. Its laws define how the money is distributed, and how winners claim their prizes. The money is usually spent on public education, but a portion of it goes to retailers as commission, too.
In the years following World War II, states that had no sales or income taxes were casting around for ways to keep their existing services without enraging an anti-tax electorate, Cohen writes. Lotteries were seen as “budgetary miracles, the chance for states to make revenue appear seemingly out of thin air.”
Lottery winners can choose to receive their prize as payments over 29 years (called annuity) or a lump sum. They can also choose to donate some or all of their winnings, and they can choose whether they want to remain anonymous.
Scammers often pose as representatives of a legitimate government agency to steal personal information and money from people who play the lottery. The Federal Trade Commission warns that the scammers use names that sound like real agencies, such as the National Sweepstakes Bureau or even the FTC itself.
New York’s first state lottery was created by voters in a 1966 referendum that called for its proceeds to be “applied exclusively to, or in aid of, education.” The winner of the first jackpot, which came from tickets purchased in Michigan, claimed his prize on November 8, 1967. Since then, the lottery has raised more than $502 billion for New York state.