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knowyourphrase.com - The Origins of Phrases and the Meanings of Sayings
Did you know this site has an alphabetical list filled with the meanings of popular sayings? Probably. Well, I'll also tell you that this site has individual pages for sports and animal related phrases as well. One thing I've noticed while making this website is that there are plenty of expressions that are associated with those two things, sports and animals. So I made pages specifically for them to help keep track of the ones I've added so far. Check them out if you're interested, or don't, that's okay too. Anyways, I have to get back to work.

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This phrase is thought come from fairs. Fairs have many different types of games that can be played, some are based around accuracy, others on strength. For example, there's a game called "high striker" where the player takes a mallet and swings it as hard as they can at a target. If the target is hit hard enough, a metallic object rises up and rings a bell, meaning the player has won. Games at the fair usually have prizes that are given out to the winners such as stuffed animals or other types of toys.

Anyways, apparently there may have been a time in the 20th century where cigars were among the prizes that could be won. If this is true, one might picture the people in charge of certain games shouting "close, but no cigar" to players who were just shy of winning the prize.

This idiom looks to go back to at least 1934, where it appears in writing in a Pennsylvania newspaper called the Chester Times:

    "An unseen pedestrian loomed before their headlights, narrowly dodged the sliding wheels. 
     'Close, but no cigar,' the lieutenant shouted.
* My coach yelled 'close, Mike, but no cigar,' after I failed to break my previous record on the 100-yard dash.
Origins:

The Meaning of the Phrase 'Close, But No Cigar' and its Origins

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Meaning: The phrase 'close, but no cigar' means to almost do something successfully, but not quite; nearing a success only to fall short at the end. 

Example: If someone was asked to do ten push-ups, but they could only do nine, then this phrase might be used describe how close they were.
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