Lottery is an arrangement in which the allocation of prizes depends in whole or in part on chance. The prize may be money or goods, or services, or a combination of both. Prize allocation may be by drawing lots, or by a process in which each person, or group of persons, contributes to the prize fund.
Regardless of the method used, the lottery is often a popular way to raise funds for public purposes. The lottery has gained broad support in states where its proceeds are earmarked for education, as well as in those that use the money to supplement state budgets without raising taxes. Lottery popularity also varies with the economic climate: during periods of stress, lotteries usually enjoy broad support.
In the United States, the modern era of the state lottery began in 1964 with New Hampshire’s adoption of one, and the trend continued until by 1975 all but 10 states had introduced them. The reasons given by the various governments for adopting and running lotteries differed, but they were all similar: the lottery was seen as a source of revenue that would cut into illegal gambling activities; it could be operated without requiring additional taxes; it offered a comparatively painless form of taxation; and it could benefit a specific public good such as education.
Once the state lottery was established, its operations typically followed a pattern: the state legislated an exclusive monopoly for itself; established a state agency or public corporation to run it (as opposed to licensing a private firm in return for a percentage of profits); began with a modest number of relatively simple games; and then, under pressure for continuous new revenues, progressively expanded the number and complexity of available games. In many cases, the increased profits were used for public works projects such as roads and bridges.
In addition to the state-run lotteries, there are private lotteries, such as keno, and international lotteries such as the EuroMillions. Private lotteries are regulated by laws of each jurisdiction, and the winnings are usually tax-free. The public has a strong interest in lotteries, especially those that promise to benefit a particular cause, such as education, and it is not unusual for a private company to promote a non-profit organization by using a lottery to raise money for its operations. Despite this popularity, the lottery is controversial. Critics cite its role in promoting addictive gambling behavior, as a major regressive tax on low-income groups, and as an overall threat to the public welfare. The government counters these arguments, arguing that the lottery is a legitimate source of public funds for legitimate public goods. Nonetheless, the criticism is persistent and widespread. A recent poll found that more than 50 percent of adults report playing the lottery at least once a year. The majority of players are lower-income, less educated, nonwhite, and male. Moreover, most of them buy tickets only when the jackpot is very large. As such, they are likely to spend a substantial portion of the winnings on more tickets.