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According to Ancient Chinese history, Cheung Leung of the Han Dynasty created a game very similar to Keno around 200BC to fund the war that had been going on for several years. Funds to support the war were getting low and the people of Leung's city were refusing to contribute more of their wages. Leung decided a game of chance, similar to keno would be the best way to generate revenue for his army. And indeed it produced enough to supply his army with all that they needed, and so the city was saved. In the years that followed, the game spread vastly throughout China, and raised enough money to fund the building of the Great Wall, which has become a world-renowned wonder. The game became known as the White Pigeon Game because pigeons were used to communicate the winning results of the game from the greater cities to the small villages in the country.

Leung's version of the game differed slightly from the one we know and enjoy nowadays. Instead of using numbers on the tickets, each field was represented with a character, all of which were taken from the famous poem 'The Thousand Character Classic'. Many years ago, the poem was used as a means of teaching children reading and writing skills. The fact that not one of the thousand characters was mentioned more than once was recognized as a great achievement. The characters were organized in a way that rhymed and made the poem easier to remember but being able to recite it on your own was a skill in itself. The poem was so popular throughout China that some people used it as a way of counting from one to a thousand. Keno started out using 120 Chinese characters, but before the game left China, that number was reduced to 90.

The history of keno in North America started with the Chinese immigrants who worked on the railroads. As part of their customs and individuality, they brought the game over to keep themselves entertained and to carry on some of their Chinese traditions. About this time the game was reduced to 80 Chinese characters.

Although illegal, keno thrived among those immigrants, especially around big cities like San Francisco. It became known as the Chinese lottery. English speaking Americans became interested in the game, but had difficulty differentiating the Chinese characters used in the game. Around the beginning of the 20th century, keno operators replaced the Chinese characters with Arabic numbers to entice more players.

Although Nevada legalized most forms of gambling in 1931, the legislature did not legalize lottery. And the Chinese lottery was definitely a lottery. To get around this nuisance, operators simply changed the name to Race Horse Keno. Each number was deemed to be a horse. Today many keno operations still call their games "races". When the U.S. Government passed a law taxing off track betting, the name was once again changed, this time to just Keno.

In 1963 the aggregate keno payout limit in Nevada was $25,000. In 1979 it was changed to $50,000. In 1989 the Nevada Gaming Commission eliminated the cap, thus allowing casinos to offer any aggregate keno payout they liked.