Lottery is a form of gambling in which numbered tickets are sold, and prizes are awarded to winners whose numbers are selected at random. It is typically sponsored by a state or organization as a means of raising funds. The word lottery is derived from the Latin lotteria, meaning “the casting of lots.” Lotteries have a long history and have been used to fund both public and private projects. In colonial America, they helped finance roads, canals, wharves, and churches. Benjamin Franklin conducted a lottery to raise money for cannons to defend Philadelphia during the Revolutionary War, and George Washington sponsored one to build roads across the Blue Ridge Mountains.
Several characteristics distinguish a lottery from other forms of gambling: the prize amounts are much higher, and the chances of winning are considerably lower. In addition, many states require that participants register in order to play, and all participating agencies or corporations must be registered with the state. In order to assure fairness and integrity, some lotteries limit the number of entries per person or business. Some states have banned lotteries entirely, but most authorize and regulate them.
The operation of a lottery requires a large pool of tickets and counterfoils from which to select winners. These must be thoroughly mixed, and the selection procedure, called a drawing, must be unbiased and verifiable. Computers are increasingly used in this process, which is necessary to prevent the manipulation of results by those who wish to win. The size of the prize must be based on the costs of organizing and promoting the lottery and on the percentage that must be deducted for taxes, fees, and profits. In addition, the lottery must determine how often to hold drawings and the frequency with which small prizes are offered.
Most state lotteries operate as a monopoly, and they are run by either an executive branch agency or a state corporation. They generally begin operations with a modest number of relatively simple games, and the need to maintain and increase revenues leads them to progressively add new games. This expansion can create problems in the short term, especially when ticket sales level off or decline. In the longer term, it can cause the lottery to become a victim of its own success.
Lottery critics cite a variety of concerns, including the potential for compulsive gambling and the regressive impact on low-income areas. In a democracy, policy decisions are often made piecemeal, and the evolution of lotteries is no exception. As the industry expands, its influence on legislative and executive branches grows, and it is harder and harder for officials to resist pressures to keep adding games.
The purchase of lottery tickets cannot be justified by decision models based on expected value maximization, because the tickets cost more than they are likely to yield. Nevertheless, people buy them because of the entertainment value they get from fantasizing about becoming rich, or because of other non-monetary rewards, and it is not reasonable to expect them to refrain from this activity.