A competition based on chance, in which numbered tickets are sold and prizes are allocated to the holders of numbers drawn at random. Some governments outlaw lotteries, while others endorse them to the extent of organizing a national or state lottery and regulating their operations. In the United States, the state-run lotteries are legal monopolies that do not allow commercial lotteries to compete against them. Historically, lotteries have played an important role in raising money for government purposes. They have been used to finance a wide range of projects, from municipal repairs to the founding of the first English colonies in North America and to fund the construction of buildings at Harvard and Yale.
The word lottery has a long history, dating back at least to the time of the Bible. It is closely related to the Latin lotrerium, meaning “fate,” and it may be a calque on Middle Dutch loten, meaning “casting lots.” The term has also been used for any process whose outcome appears to depend on chance: Life’s a lottery, for example.
In the United States, state legislatures create the laws governing their lotteries, which they then delegate to a lottery commission or board to administer. These agencies select and license retailers, train retail workers to use lottery terminals to sell and redeem tickets, promote lottery games, pay top prize winnings, and enforce compliance with state law and regulations. They may also be responsible for establishing the minimum prize amounts, determining how much of the total prize pool will be paid to top winners, and creating rules limiting how large a jackpot can be.
Lottery profits are used to fund a variety of state and local projects, including education. In fiscal 2006, the states allocated $17.1 billion in lottery profits to such purposes. Some critics object to the use of lottery profits for this purpose, arguing that promoting gambling can have negative consequences for poor people and problem gamblers.
Many states have expanded their lotteries by introducing new types of games, such as video poker and keno, and by making the games available online. The proliferation of these types of games has produced a second set of issues. As with the first set of issues, these involve a debate over whether or not it is appropriate for public policy to fund activities that depend on chance for their outcome:
Lottery revenues typically expand dramatically when they are introduced, but they then level off and eventually decline. This has led to a race to introduce new games and tactics in an attempt to keep revenue levels high. These initiatives have raised concerns about the exploitation of vulnerable populations, the lack of accountability for state-run lotteries, and the need to balance revenue generation with other state functions.