Lotteries

Lotteries appeared in Tennessee before statehood in 1796, were prohibited by constitutional amendment in 1835 and 1870, and continue to generate public debate today. By definition, a lottery is any contest that involves three factors: the payment of money, for a chance, to win a prize.

The first recorded lottery within the present boundaries of Tennessee occurred in 1787, while the region was still a part of North Carolina. Its proceeds were designated for building a road from the south end of Clinch Mountain to Bean's Lick. Widely advertised, lotteries became common in the early nineteenth century. Private lotteries were held without government control for the benefit of individuals, usually to dispose of property or to encourage business. In 1809 the legislature outlawed these types of lotteries, claiming they encouraged idleness and dissipation. However, the continuing existence of “underground” lotteries calls to question the effectiveness of the legislation.

Quasi-public lotteries to allow an individual to devise his own lottery scheme in order to pay debts through the sale of his property required legislative approval. In Tennessee, at least eleven such lotteries were approved between 1819 and 1829.

After 1809 the legislature approved lotteries for the benefit of projects of public interest. In order to insure honest administration of public lotteries, the legislature imposed regulations, appointed respectable trustees, and required the lottery managers to take an oath of honesty. Private organizations such as Masonic lodges petitioned for authorization to conduct lotteries. Lotteries for educational purposes and for public improvements, primarily in transportation, received the highest approval rates. Public lotteries helped to finance schools and higher education, benefiting Nashville College and Cumberland College (later the University of Nashville), and Peabody College (now part of Vanderbilt University). The City of Nashville built wagon trails, a waterworks, a hospital, and a town clock through public lotteries.

Despite their positive contributions, lotteries experienced a variety of problems. Due to their initial popularity, the market was soon saturated with them. Notable Tennessee lotteries such as an 1810 lottery to benefit what is today the University of Tennessee experienced difficulties selling a sufficient number of tickets to fund the drawing. Other lotteries encountered the same problem, and many drawings had to be postponed. Although there were no accusations of the fraud and corruption common to the lotteries in other states, private publications began to point to social ills such as drunkenness, laziness, and even suicide as direct effects of lotteries. By the late 1820s public sentiment had turned against lotteries.

In 1829 the Tennessee Supreme Court dealt a serious blow to the lottery. In State v. Smith the court held that participation in a private lottery was gambling and subject to a criminal penalty of disqualification from holding public office. But Judge John Catron drew no distinction between public and private lotteries when he denounced the lottery as “odious gambling” and the cause of ruin, beggary, and drunkenness.

Though limited to private lotteries, Smith sounded the death knell for all lotteries. That same year, the Tennessee legislature codified Smith by outlawing “unauthorized” lotteries, followed by an act in 1832 that made the sale of any lottery ticket illegal. In 1834 the Committee on Private and Local Legislation submitted a report to the Tennessee constitutional convention in which lotteries were defined as legalized gambling. The committee advocated the prohibition of legislative authority to license them. The convention incorporated this recommendation as Article XI, Section 5 of the Tennessee Constitution of 1834, which states, “The legislature shall have no power to authorize lotteries for any purpose; but shall pass laws to prohibit the sale of lottery tickets in the State.” The same provision was incorporated in the constitution of 1870 and remains the fundamental law today.

Despite legal provisions, the lottery persists as a controversial issue. In 1989, in Secretary of State v. St. Augustine Church/St. Augustine School, the Tennessee Supreme Court, in effect, outlawed “charitable” bingo by holding it to be a lottery under the state's constitution and striking down statutes enacted to protect such gaming. Yet the court also held that the constitution did not prohibit gambling, leaving confusion as to what constitutes a “lottery.” As surrounding states enacted lotteries to fund public education and siphon money that might otherwise be wagered in Tennessee, the lure of instant wealth and the need for public funds prompted many to question the existing law and urge the establishment of a state-run lottery.

In 2001 the Tennessee General Assembly approved a resolution that would ask voters in the November 2002 election to amend the constitution by removing its ban against lotteries. If voters agree to amend the constitution to make lotteries legal, supporters predict that a Tennessee lottery, with funds earmarked for education, would be established in 2003.