Lottery is a game of chance in which participants pay a small amount of money (typically less than $1) and try to win a prize based on the numbers drawn by random machines. In the United States, state governments conduct the lottery; some countries also organize private lotteries. Prizes can range from cash to valuable goods. The first lotteries were organized in the late 15th century, and the term lottery was derived from the Latin word lotere “to draw lots”.
Making decisions and determining fates by casting lots has a long history—the Hebrew Bible includes several instances of this practice. The modern state lottery originated in New Hampshire in 1964, and since then, almost all states have adopted them.
State governments typically legislate a monopoly for the lottery; establish a public agency or corporation to run it; begin operations with a modest number of relatively simple games; and then, under pressure to increase revenues, progressively expand the scope of offerings. A percentage of proceeds normally goes to costs such as marketing and organizing the lottery; a smaller percentage goes as revenue and profits for the state or sponsor; and the remaining portion of the pool is available for prizes. In many cultures, potential bettors tend to demand the opportunity to win a large jackpot—ticket sales spike significantly during rollover drawings—but they also want a chance to win smaller prizes as well.
While revenue growth of state lotteries typically starts quickly, it can level off and even decline over time. The continual introduction of new games in order to maintain or increase revenue has fueled criticism that the state is engaging in gambling promotion, particularly because its primary goal is to profit from it.
Lottery games have a reputation for being addictive, and some critics claim that the games target poorer individuals in particular. Other concerns include alleged negative impacts on social welfare, such as the targeting of problem gamblers and the introduction of more addictive games to the market.
Lottery proceeds can be used for a wide variety of purposes, including funding support centers and groups for gambling addiction or recovery and enhancing general funds to address budget shortfalls or fund public services such as police forces or roadwork. Some states, such as Minnesota and Pennsylvania, also use a percentage of their revenues to fund lottery-related programs that are targeted to specific social needs, such as housing units in subsidized apartment complexes or kindergarten placements at a specific public school. In other states, such as Oregon and Nevada, winnings may be paid out as an annuity or in a lump sum; the latter approach has a lower time value, and therefore is expected to yield a larger net income. However, withholdings on a lump sum can erode the actual size of the prize received by the winner.
