What is a Lottery?


Lottery is a scheme for the distribution of prizes by chance. The word is derived from the Dutch noun lot, meaning fate or fortune. Lotteries have been around for hundreds of years. Throughout the centuries, they have varied in size and complexity, but their basic structure remains similar. The first state-operated lotteries were launched in the Low Countries in the 15th century, as a way to raise funds for town fortifications and to help the poor. Since that time, the lottery has become a major source of public revenues in many states.

Typically, lottery bettors write their names or other symbols on a ticket and deposit it with the lottery organization for subsequent shuffling and selection in a drawing for prizes. In modern times, most lotteries use computers to record the results of each drawing and distribute the prizes. A few of the winnings are used to pay for administrative costs and profits, and the remainder is awarded to bettors.

A central issue with lotteries is whether government at any level should manage an activity from which it profits. This is a particularly sensitive issue in an anti-tax era, when politicians are under pressure to increase the amount of lottery revenues, and the popularity of the games themselves can be used as a proxy for the broader public’s desire to gamble.

A second issue concerns the extent to which lottery participants are rewarded for their efforts. Suppose that a lottery is well designed and the chances of winning are equal for all participants. Then, for any particular participant the utility of a monetary prize is weighed against the disutility of the effort required to participate, and a rational decision is made to purchase a ticket.