What is a Lottery?


A competition in which numbered tickets are sold and prizes are awarded to those who win by chance, often sponsored by states or other organizations as a means of raising funds. Sometimes also used figuratively to refer to any situation whose outcome depends on luck rather than on effort or careful organization. For example, some people think that marriage is a lottery—it all depends on the luck of the draw (and the number of entrants).

The term lotteries has been around for centuries, and the first recorded ones were held in the Low Countries in the 15th century to raise money for town fortifications and help the poor. More recently, they have become a popular source of public funding for everything from road repairs to zoo exhibits to college scholarships. But they are not without controversy.

Some of the criticism focuses on the alleged regressive nature of lottery proceeds, and other concerns such as compulsive gambling or the risk of corruption. But the main problem with lotteries is that they are based on a fundamentally flawed assumption, one that many people seem to have bought into: that a random draw can provide instant wealth.

State officials who set up a lottery are aware of this bias, and they try to mitigate it by stressing the social benefits of the prize money. They argue that the revenue is earmarked for specific purposes and is not merely an alternative to increasing taxes or cutting other programs. This strategy works, and lotteries retain broad public approval even when the objective fiscal health of states is relatively good.

Another reason lotteries are so widely tolerated is that they benefit a range of specific interest groups. For example, convenience stores are a major supplier of lottery products, and the operators of these outlets make a substantial profit. The same is true of the suppliers of the machines that run the games. Lottery profits are not only a boon for these interests, but they are also helpful to political parties and candidates, who can count on support from the various lotteries’ patrons.

As a result of these and other factors, the popularity of lottery games has increased significantly over the past decade, as have their advertising expenditures. And as their jackpots grow ever bigger, they can be expected to attract still more participants. In most countries, winners choose between receiving their winnings as an annuity payment or in a lump sum. But lump sum winnings tend to be much less than advertised jackpots, because of the time value of money and income tax withholdings. Moreover, the huge amounts of publicity that are generated when the jackpots reach impressive levels can be expected to boost future sales.