Lottery is a game of chance in which a person or group draws lots for a prize. In most cases, the prize is a lump sum of money. Lotteries are popular with governments because they provide a source of “painless” revenue: the winnings are collected from players who voluntarily spend their money (as opposed to government coercion and taxation). In addition, lottery proceeds benefit local businesses that sell tickets and larger companies that participate in merchandising campaigns. Lotteries have been around since ancient times and are considered one of the oldest forms of gaming. The first recorded example is a keno slip from the Chinese Han Dynasty between 205 and 187 BC. Later, in the 16th century, towns in the Low Countries began to hold public lotteries to raise funds for town fortifications and poor relief.

Today, most states run their own lotteries. In most cases, the state legislature creates a lottery monopoly; establishes a public corporation to run it (as opposed to licensing a private company in exchange for a cut of the profits); and begins operations with a modest number of relatively simple games. Over time, as the revenue from those games dwindles, the state tries to increase revenues by adding new games and increasing advertising.

Lottery proponents often argue that the proceeds from the games help a specific public good, such as education. But there is no evidence that lotteries are effective at achieving this goal, and research suggests that the objective fiscal health of the state has little to do with whether or when it adopts a lottery.