The NBA Board of Governors, meeting in Salt Lake City in June of 1984, voted to adopt a lottery system among the non-playoff teams to determine their order of selection in the first round of the NBA Draft beginning in 1985.
From 1966 through 1984, the teams that finished with the worst records in each conference participated in a coin flip to determine which team would draft first. The remaining teams picked in inverse order of their won-lost records. Under the system adopted prior to the 1985 NBA Draft, the NBA Lottery determines the order of selection for the non-playoff teams (or the teams holding their picks through trades) for the first round only. Teams pick in inverse order of their records in the second round (or, prior to the draft being reduced to two rounds in 1989, in all succeeding rounds).
Under a procedural change adopted by the Board of Governors in April of 1986, the Lottery determines the order of selection for the first three teams only. The remaining non-playoff teams select in inverse order of their regular season records. Therefore, the team with the worst record in the league is assured of picking no worse than fourth, the team with the second-worst record no worse than fifth and so on.
In a further refinement in October of 1989, the Board of Governors adopted a weighted system beginning with the 1990 NBA Draft Lottery, which included 11 teams due to expansion. The team with the worst record during the regular season received 11 chances at the top pick (out of a total of 66), the second-worst team got 10 chances and the team with the best record among the non-playoff clubs got one chance.
The Board of Governors approved a modification of the Lottery system in November of 1993 that, effective with the 1994 NBA Draft Lottery, increased the chances of the teams with the worst records in the league winning one of the top three picks in the draft while decreasing the lottery chances of the teams with the best records. The new system increased the chances of the team with the worst record drawing the first pick in the draft from 16.7 percent to 25 percent, while decreasing the chances of the team with the best record among lottery teams from 1.5 percent to 0.5 percent.
Under the system, 14 ping-pong balls numbered 1 through 14 are placed in a drum. There are 1,001 possible combinations when four balls are drawn out of 14, without regard to their order of selection. Prior to the Lottery, 1,000 combinations are assigned to the Lottery teams based on their order of finish during the regular season. Four balls are drawn to the top to determine a four-digit combination. The team that has been assigned that combination will receive the number one pick. The four balls are placed back in the drum and the process is repeated to determine the number two and three picks. (Note: If the one unassigned combination is drawn or if the same team comes up more than once, the result is discarded and the balls are drawn again.)
In October of 1995, the Board of Governors increased the number of teams participating in the Lottery from 11 to 13 to account for the addition of expansion teams Toronto and Vancouver. Starting in 1996, the team with the worst record in the Lottery continued to have a 25% chance of winning the first pick, teams two through six have slightly fewer chances, team seven has the same number of chances and teams eight through 12 have slightly more chances. The number of chances for team 13 did not change.
The 2004 NBA Draft Lottery increased to 14 teams with the addition of the Charlotte Bobcats. The Bobcats, as part of their expansion agreement were locked into the fourth position in the 2004 Draft and therefore did not have a chance to receive other picks in the Lottery.