What is casting lots?
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Question: Where in the Bible do we find the practice of lots?
Answer: The tradition of casting lots is in the scriptures several times. They are thought to have been used in 1Samuel 14:40-42. In this case, however, it is not the lots but rather the Urim and Thummim used to render a decision. According to the Jewish historian Josephus, the Urim consisted of two sardonyx stones, each contained in a pouch in the Breastplate worn by the High Priest. This breastplate is known as the breastplate of judgment. That said, however, the practice you mentioned was used frequently in ancient Israel.
The rendering of an impartial decision on important matters was the main reason for lots. Once cast, no one could argue that the decision arrived at was the result of politics, nepotism, favoritism, etc. This would be the same as the throwing of dice or the flipping of a coin we use today. Anciently, they used different means to cast lots, depending on the location and customs, such as polished sticks, coins, cards, dice, etc.
What is particularly significant is the fact that, in ancient Israel, the High Priest did use from time to time the tradition of casting lots for important, uncertain decisions. It amounted to consulting God for the answer: "The lot is cast into the lap, but its every decision is from the Lord." (Proverbs 16:33)
This impartial practice stops arguments and contentions between people (and no doubt could prevent them from occurring in the first place). The book of Proverbs states: "Casting lots causes contentions to cease, and keeps the mighty apart." (Proverbs 18:18). The last recorded Biblical case of its use is in Acts 1:24-26, when the apostles asked for God's decision regarding the choice between two men to replace Judas:
"And they prayed and said, "You, O Lord, who know the hearts of all, show which of these two You have chosen to take part in this ministry and apostleship from which Judas by transgression fell, that he might go to his own place." And they cast their lots, and the lot fell on Matthias. And he was numbered with the eleven apostles." (Acts 1:24-26)