After the first English lottery approved by King James I in 1612 that granted the Virginia Company of London the right to raise money and therefore found the original settlement, lotteries in the colonies continued to be popular. In fact lotteries played a significant role in the financing of building and improving the colonies. Records show that over 200 lotteries were permitted between 1744 and the American Revolution, these played a vital role in the funding of roads, libraries, churches, colleges, bridges, and other public works. Princeton, Columbia University, and the University of Pennsylvania began by being financed by lotteries. Lotteries also played a part in supporting the war efforts during the French and Indian Wars and the American Revolution. Rare lottery tickets with George Washington's signature can still be found and are worth about $15,000 today.
Alexander Hamilton wrote that " Everybody...will be willing to hazard a trifling sum for the chance of considerable gain...and would prefer a small chance of winning a great deal to a great chance of winning little." while the Continental Congress employed lotteries to aid in the war effort. The lotteries were especially useful in raising funds as taxation was a sensitive issue among the colonists, unfortunately this practice also led to the belief that lotteries were/ are a form of hidden tax.
Although lotteries continued to be popular after the Revolution, by the late 19th century they became known for mismanagement and scandals and started to be banned in many states. The Louisiana State Lottery (1868-1892) became the most notorious state lottery and was known as the "Golden Octopus" as it reached into every American home. The Louisiana lottery especially was a breeding ground of corruption having bribed the legislators into a fraudulent deal, during a time when other states were viewing lotteries and gambling with suspicion. In July of 1890 President Harrison sent a message to Congress insisting that "severe and effective legislation" be enacted against lotteries. Congress agreed and banned US mails from carrying lottery tickets almost immediately and in 1892 upheld a law to put a complete halt to all lotteries in the US by 1900.