A lottery is an arrangement by which prizes are allocated by chance. It differs from a gambling game in that payment of consideration (usually money) must be made for the opportunity to win. It is also different from other arrangements in which a prize is awarded by chance, such as the award of military conscription and commercial promotions in which property is given away or sold at random. Lotteries have been used to raise funds for many purposes, from the building of the British Museum to aiding the poor in America.
In the United States, state-sponsored lotteries have long been popular, attracting millions of participants and raising billions of dollars in prize money. Most state-run lotteries are now multistate games, whose proceeds are shared with participating state governments. State officials decide how the money is used. Some put the funds into a general fund that may be used for budget shortfalls, while others set it aside to help poor people or to support education.
The term lottery is derived from the Old English word hlutr, which means “share, portion, or lot.” The modern word is derived from Old Frisian hlot and Middle Dutch loet, and is cognate with German klutz (“fate”).
Since their introduction in the 1500s, many nations have regulated and conducted lotteries as a way to distribute money or goods among citizens by chance. In the earliest times, people would draw names from a bowl or other container to determine their shares of the spoils. This was later expanded to include the selection of winners of specific prizes by chance, such as housing units in a new development or kindergarten placements at a local public school.
Modern lottery games are a result of the growth of government and the rise of the printing industry. As more and more people learned to read, the ability to mass produce paper and print on it became possible. This paved the way for the creation of the modern state lottery.
While it is a popular myth that most states have established their lotteries on the basis of economic need, that is, to provide jobs, most states began by legalizing and regulating them for other reasons, including the desire to raise revenue. Regardless of how they have evolved, most state lotteries follow similar paths: the state legislates a monopoly for itself; establishes a state agency or public corporation to run the lottery (as opposed to licensing a private firm in return for a share of profits); begins with a modest number of relatively simple games; and, due to continuing pressure to increase revenues, progressively expands the scope and complexity of its offerings.
Despite the claims of lottery promoters and legislators, the fact is that the bulk of ticket sales and prize money come from middle-class neighborhoods, while low-income residents do not participate at a level commensurate with their percentage of the population. This has led some observers to criticize lotteries as a form of “regressive taxation.” However, the evidence suggests that, overall, lottery players tend to spend a greater proportion of their income on tickets than the national average.