A lottery is a gambling game in which prizes are drawn at random to determine winners. Prizes are typically cash or goods. Often, the number of winners and the total value of the prizes are determined by the amount of money collected from participants. During the drawing, the winning numbers are chosen by lot (drawing). The word “lottery” is probably derived from the Dutch language word lot, which means fate or chance: “Their fortunes are in the lottery; they do not know what shall be.”
In the modern sense of the term, the first European lotteries appeared in Burgundy and Flanders in the 15th century to raise money for strengthening defenses or helping the poor. Francis I of France allowed private and public lotteries with monetary prizes to be established in several cities between 1520 and 1539. Possibly the first European public lottery to award cash prizes was the ventura held since 1476 in the Italian city-state of Modena under the patronage of the d’Este family.
Despite the long odds against winning, people buy lottery tickets in significant quantities. This behavior is not easily explained by decision models based on expected value maximization. Instead, the purchase of lottery tickets can be accounted for by risk-seeking behavior and a desire to experience a thrill. In some cases, the purchase of a ticket may also enable individuals to indulge in their fantasies of becoming wealthy. In most instances, lottery purchases do not result in the maximum possible financial gain and thus should be excluded from calculations of expected value maximization.