'Changed everything:' How the world's 1st lottery scratch ticket was invented 50 years ago (2024)

Launching the Massachusetts lottery in 1971 wasn’t the daunting part for William Perrault, the agency’s first executive director.

It was his goal to revolutionize the industry that proved the most challenging.

Perrault envisioned an instant-winner game with larger prizes — but security issues stalled his efforts.

Then, two young men from the University of Michigan walked into his Boston office with a brilliant idea.

Three years later, at 6 a.m. on May 29, 1974, the world’s first lottery scratch ticket game was released by the Massachusetts State Lottery, printed by a new company called Scientific Games.

“The Instant Game,” a flashy red-and-yellow foil scratch ticket, advertised “thousands of people will have already won” within the first 12 hours of its release. It cost $1 and featured a $10,000 grand prize (more than $66,000 in today’s dollars) or a $1,000-a-week-for-life prize — unheard of winnings at the time.

Scratch tickets generated over 60% ($4.043 billion) of state Lottery revenues last year. To celebrate the 50th anniversary of the instant game, the Lottery will release a scratch ticket nearly identical to the inaugural one on Wednesday — May 29. It will cost $2 and have a top prize of $50,000.

Like many iconic ventures, the invention of the lottery scratch tickets’ gets partial credit to a college dorm room. A board game about U.S. presidential elections is also somewhat responsible.

John Koza was a UMich student working on his Ph.D. in computer science in the mid-1960s. He and a friend, fellow student Bill Behm, created “Consensus.” The board game was based on the U.S. Electoral College, and the duo started a company called “Scientific Games Development Corporation” to make and sell the game.

Koza also worked part-time consulting for a Chicago-based game company called J&H during college. His employer had a printer in Atlanta that would stamp one-cent prizes onto cards that were then covered by a scratch-off coating. The tickets were free for the taking at grocery stores and gas stations.

It was a little “giveaway game,” Koza said; customers were so thrilled with it that they would go to a store for a ticket and leave without buying anything.

But Koza and his coworker, Dan Bower, noticed some security flaws with the popular promotional game. Unbeknownst to them, these flaws were similar to what Perrault was trying to solve in his quest to create an instant-winner game.

What Koza and Bower did know, however, was J&H was sitting on a potential goldmine.

”They were pioneering a type of ticket ... (where) you wouldn’t rub all the spots like you do today on the instant ticket,” Koza, 80 and retired, said during a recent phone interview.

”You maybe rub three out of 10 spots, and every ticket would be a potential winner,” he explained.

Yet the giveaway process was completely unsupervised, controlled by gas or grocery employees, which fueled the term “winner pick out,” Koza, who now lives in Los Altos Hills, California, said.

Workers who handled unscratched tickets could identify the winners through printing imperfections, steal them and create a giveaway pile of only losing tickets, he said.

It could cause the public to lose faith in the game — and cause the printing company to go broke.

Aware of the risk, J&H’s promotional ticket redesign included a printing method for the coating on the ticket “for the physical security of the rub off and the way of randomizing the information under the spots,” Koza said, so the game could no longer be cheated, by anyone, based on defects.

But Koza and Bower thought those free scraps of chance cheer could be so much more.

Vietnam War led to invention of scratch tickets

State lotteries were cropping up around the country in 1964 after the first was established in New Hampshire. As Vietnam War spending increased, so did inflation and budgetary shortalls, Jonathan Cohen, author of “For a Dollar and a Dream: State Lotteries in Modern America,” told WBUR in January 2023.

“Voters wanted all the public services they had gotten used to but also didn’t want higher taxes,” he said.

This mix of circ*mstance and public sentiment provided an opening for states to establish lotteries.

”We had the idea that maybe the state lotteries that were just getting started would be interested in running a game, an instant game — not a game where every ticket was a winner, but where the player would win instantly,” Koza said.

The two young men started pitching their scratch ticket idea to state lotteries on behalf of their employer.

”Of course, state governments had security requirements well beyond what a supermarket or gas station would want,” he said. And state lottery jackpot drawing prizes were already higher at 50 cents or $1, further heightening the necessity of protections for a new game with dramatically larger prizes, Koza said.

“(Perrault) was interested in the instant game, while some of the other lottery directors were more cautious. He was quite an innovator on a lot of things and willing to try something new,” Koza said.

The director was a mathematician, he added, who did a lot of “mathematical market research, which in the 70s was quite novel and today is more commonplace.”

“Many of the other states were not … and frankly didn’t have a mathematical background to understand what we were doing. Perrault, who earned a Ph.D. in mathematics and statistics from Saint Louis University, understood the security problems of printing this kind of ticket,” he said.

During their pitch, they discovered Perrault had already designed an instant ticket game — and that Koza and Bower held the solution to his security frustrations.

Bankruptcy almost topples Mass. scratch ticket deal

As fate would have it, just as papers were to be signed, the deal nearly came crashing down.

“Making any sale to a state government is a very slow process,” Koza said. “And while this was happening, the company we worked for went broke.”

Unflappable, they linked back with Koza’s college friend Behm and made a major business play.

Taking the board game production company they’d legally established in college — “I think this was what we today call a startup company,” Koza said — the trio shortened the name to “Scientific Games” and again went to Massachusetts with their new company backing.

“We luckily were able to close a sale with the Massachusetts Lottery late in ‘73. We printed the tickets in early ‘74, and then we launched ‘The Instant Game’ in May of ‘74,” Koza said.

The game was an absolutely wild success, exploding into a worldwide phenomenon almost overnight.

“Everybody was working sixteen, eighteen hours a day,” Koza said. “The company grew very fast; it was just all-consuming, and it was obviously very successful,” he said.

“Of course, once he launched ‘The Instant Game’ in Massachusetts, other state lotteries saw how [its] sales went up. They became instantly very interested in copying what Dr. Perrault had done,” Koza said.

Scratch tickets had previously unheard-of prizes

In addition to the game’s immediate gratification, players were lured by how much money they could win.

“At the time, the top jackpot prize was typically $1 million, which could be paid at $50,000 a year for 20 years,” Koza said. “But [Massachusetts] was, in effect, offering $52,000 [a year] for life.”

Today, tickets printed by Scientific Games — now led by CEO Patrick McHugh — are sold by 112 lotteries in 47 different countries. They represent 70% of instant game retail sales globally.

As Scientific Games continued winning over lottery players worldwide, scratch ticket prizes also grew — as did the ticket price. Options in Massachusetts expanded to $2 and $5 tickets released in 1992, then to $10 tickets in 1999, $20 in 2007, $30 in 2014 and most recently last year, $50.

For Koza, the invention of the scratch ticket is just one of his many accolades.

He received his doctoral degree the same year J&H collapsed, and left his CEO position at Scientific Games in 1988 to teach at Stanford University.

It was there he became the father of genetic programming, a form of artificial intelligence that has computers solve problems without explicitly programming them to do it. Koza taught these courses until 2003, publishing four books and over 200 papers on the concept over the decades.

He then circled back to his college-aged passion: the U.S. Electoral College. He finished out his career by starting up National Popular Vote Inc., a nationally recognized organization.

The nonprofit’s representatives visit states around the country to advocate for laws, making it so candidates who win the majority of the popular vote also win the majority of Electoral College electors. There have been 18 states, including Massachusetts, to adopt such legislation so far, Koza said.

Scratch tickets ‘changed everything’

The first, “The Instant Game,” brought in $21 million in sales and returned $8 million in local aid to the 351 towns and cities across the state.

In 2023, the lottery returned a record-breaking $1.176 billion in local aid to municipalities for the fiscal year.

Bolstered by the state’s first $50 ticket, which Massachusetts pioneered, scratch ticket sales, at $4.043 billion, made up over half of the lottery’s total $6.131 billion in sales revenue last fiscal year.

Lottery players in Massachusetts also won a record total of $4.483 billion last year, the most of any state. Bay State residents — by a landslide — spend the most per capita on the lottery in the nation.

It’s all evidence of a bold strategy in constant innovation and risk-taking, one that Koza said Massachusetts Lottery leadership evidently has subscribed to over the years.

Earlier this year, when Mass. Lottery Executive Director Mark William Bracken mused over the success of several recent lottery projects, such as the “Jaws”-themed instant ticket released March 26, the director had a light bulb moment.

The 50th anniversary of the world’s first scratch ticket was mere months away, and it was up to the Massachusetts Lottery, as its birthplace, to commemorate it.

“This is monumental, considering the trillions of dollars [of] instant tickets have sold since we created the very first one — so we knew we should do something,” Bracken said.

The 50th-anniversary ticket will be released on May 29 — five decades to the day after the first was released. It features a $50,000 top prize, a “$50 Bonus Box,” and five drawings. It includes four Second Chance drawings and one live event Final Bonus drawing.

“We’ve had a great time doing the whole ‘50′ … the 50th anniversary, the first $50 ticket and the second $50 ticket,” Bracken said. “Now, [we pay] respect to that original ticket and what it did for the industry. It’s worldwide ... that’s the thing, this is worldwide, and it changed everything.”