A competition in which numbered tickets are sold for the chance to win a prize, often money but also goods or services. Lotteries are common forms of gambling in many states, and are a source of state revenue. They are also commonly used to fund public projects, such as school construction and road repair. In addition, state governments have promoted lotteries as a way to stimulate the economy, and they are frequently cited as models for other states seeking to legalize casinos or expand the scope of gaming.

The casting of lots as a means of decision-making and (in early use) divination has a long history, but the lottery as a mechanism for distributing prizes is much more recent. The earliest known public lotteries took place in the 15th century, when towns in the Low Countries raised funds to build walls and town fortifications by selling tickets for a prize of money or goods. The first recorded lottery offering money as a prize was held in 1466 at Bruges, Belgium.

While the popularity of the lottery has been growing rapidly, critics have argued that it is a waste of money and that the proceeds should go to other purposes, such as education. State officials rebut this argument, arguing that the lottery is a good way to raise taxes without raising state spending or increasing the burden on individual taxpayers. The public generally accepts this argument, and the lottery has been a successful vehicle for generating state revenues in all states that have adopted it.

Lottery revenue growth is typically explosive in the early stages, but levels off and even declines over time, as players become bored with the games. To maintain revenue, the lottery must constantly introduce new games. In order to sell the games, it is necessary to convince potential players that they have a real chance of winning. To do this, it is necessary to create a large and attractive prize pool. In many cases, this means creating jackpots that are so massive as to capture the attention of newspaper and television reporters and increase ticket sales.

In order to maximize revenue, a lottery must appeal to multiple audiences: the general public; convenience store operators and their staff; vendors and suppliers (heavy contributions by lottery suppliers to state political campaigns are routinely reported); teachers (in states in which lottery proceeds are earmarked for education) and so on. In addition, the lottery must compete with other types of gambling in other venues and on the Internet.

The primary question in this context is whether a state should be in the business of encouraging people to gamble and, if so, how that should be accomplished. Lotteries are a form of gambling, and the promotion of gambling has consequences for the poor and problem gamblers. These concerns are not trivial, and they should be considered carefully before a state adopts a lottery. A careful study of the historical records of lottery adoption and operation can help guide the development of future policies.