In trying to limit the impact of short-term rentals like Airbnbs, New Orleans used an elaborate lottery system to pit neighbors against each other. A lawsuit from angry hosts has put it in limbo.

The average rent for an apartment in New Orlenas is around $1,350 per month, but the average price per night of an Airbnb in the city is $198 per night. PHOTOGRAPHY: BRYANTARNOWSKI/BLOOMBERG/GETTY IMAGES

In the fight to regulate short-term rentals, New Orleans had a novel idea—it would hold a lottery. The plan was simple: Carve up the city into blocks and use a hand-cranked lottery machine to draw numbers, allowing one rental property per residential block. For the winners, the prize was a license to keep listing their property on sites like Airbnb and Vrbo. For the losers, despair.