What is a Lottery?

Lottery is a game of chance in which people buy numbered tickets and prizes are awarded to those whose numbers are drawn by lot. It is commonly sponsored by a state or other organization as a means of raising funds. Although making decisions and determining fates by drawing lots has a long history (including several instances in the Bible), public lotteries have only recently become widely accepted as a method of raising revenue.

Lotteries are remarkably popular: in every state where they are legal, at least 60% of adults report playing at least once a year. This is in part because of the broad appeal of the prizes, but also because lottery revenues do not raise taxes or cut other state programs. They are a form of “tax-free” revenue, and voters have been willing to approve them even when their states’ fiscal circumstances were strong.

Until the 1970s, most state lotteries were little more than traditional raffles in which players bought tickets and won a prize at some future date, usually weeks or months away. However, innovations in the lottery industry prompted an expansion of games and a relentless marketing effort. Revenues typically expand dramatically after a lottery’s introduction but then level off and sometimes decline, which necessitates the introduction of new games to maintain or increase ticket sales.

To keep sales robust, state lotteries must pay out a respectable portion of receipts in prizes. This reduces the percentage available for state revenue and use on items like education, the ostensible reason for having a lottery in the first place.