Where does the phrase handicap came from?

Answer 1

"Handicap" comes from an old lottery game called "hand in cap," in which winners received a penalty. That is why favorites in a horse race carry a "handicap" of extra weight. Hence, handicap means any kind of hindrance or setback, especially a physical one.

Answer 2

From 15th-century England. It had nothing to do with being 'physically challenged' but was first used as the name of a sort of game where the trick was to come out equal, called handy-capp. Because of the nature of that game the term was gradually generalized in meaning to 'the way to create a level playing field', the meaning it still has in Golf and horse-racing. Because in practice those handicap-systems worked to hold back the more able participants, handicapping later became synonymous to 'disabling'; so a disabled person got to be called 'handicapped'. That use by the way dates back to no further than 1914.

A popular - but incorrect - myth has is that it came from 'begging cap-in-hand'. It doesn't.