1590s, "thing for drying wet spots," agent noun from blot (v.). Meaning "bad writer" is from c. 1600. Sense of "day book" is from 1670s, and the word was applied by 1810 to rough drafts, scrap books, notebooks, and draft account books. Hence the police jargon sense "arrest record sheet," recorded from 1887.
The Waste-Book, or Blotter, is nothing different from the Journal, only from the circumstance that it is used in moments of haste during the business of the day, when it is not practicable to observe that precision, neatness, and order, which we wish to appear on our Journal, which is nothing more nor less than a better finished copy of the Blotter itself .... [Lyman Preston, "Preston's Treatise on Book-Keeping," New York, 1835]