It’s a game of chance. It’s also a form of taxation, but is the lotto a game of skill? Well, you might be surprised to know that the lottery dates back to the Middle Ages. In fact, the first documented lotteries were held in the Low Countries, with money prizes offered on tickets. These public lotteries were held to help the poor and raise funds for town fortifications. But the earliest recorded lotteries were probably much older. One record from L’Ecluse, in France, mentions a lottery in 1445, which raised money for the town’s fortifications. In that case, the lottery was held to raise 4,304 florins, the equivalent of about US$170,000 in 2014.
It’s a form of taxation
The lottery is a form of taxation. While lottery proceeds are not considered tax revenues, they do constitute an implicit tax. Since lottery profits are paid by consumers to government, the government needs to raise revenue for general services. But the lottery is not neutral when it comes to taxes, and taxing one good more heavily than another is economically inefficient. This will make consumers shift away from that product, resulting in lost tax revenue.
It’s a game of skill
A game of skill requires that the entrants perform skills-based activities. The terms and conditions of the competition must clearly state the criteria that will be used to judge the entrants. Public votes are also required for ‘best’ entrants. A game of skill involves no element of chance, and thus must be governed by fairness. The main benefit of games of skill is that they don’t require lottery permits or comply with the requirements of trade promotion lotteries.