What is a Lottery?

Lottery is a process in which participants pay to participate in a chance to win something, generally money or goods. There are two basic types of lottery: those that award cash prizes and those that award numbered tickets. Both types are distinguished by the three elements of payment, chance, and consideration.

Lotteries are not new; the drawing of lots for possession or ownership is recorded in many ancient documents, including the Bible and the Book of Common Prayer. The practice became widespread in Europe during the fifteenth and sixteenth centuries and was introduced to America in 1612. Lottery profits have been used to raise funds for towns, wars, colleges, and public-works projects.

In a typical lottery, applicants write their names or numbers on paper that is deposited with the lottery organization for shuffling and possible selection in the drawing. The entrants’ names and/or numbers are then extracted from a pool of entries and placed in a drawing machine, which allocates winning positions randomly. Computers are increasingly used in this function.

In the late twentieth century, state-run lotteries took hold in the United States, and a large number of private companies offered their own versions. In 2006, lottery revenues totaled $17.1 billion. These revenues are allocated to a variety of purposes by individual states. The distributions are shown in Table 7.2.