A lottery is a form of gambling in which numbers are drawn at random for a prize. Some governments outlaw it, while others endorse it and organize a state or national lottery. Lottery winners may choose to receive a lump sum of cash or an annuity. The size of the lump sum or annuity payments depends on the rules of each lottery and the individual’s financial goals.
States enact laws regulating lottery operations, typically delegating to a state agency or public corporation responsibility for selecting and training retailers, managing lottery terminals, promoting the lottery, and selecting high-tier prizes. The agencies also oversee the distribution and redemption of winning tickets, pay prizes, and certify compliance by retailers. Lottery officials are under pressure to keep revenues up, so they continually introduce new games that increase ticket sales and promote them through heavy advertising.
After a lottery’s initial success, however, revenue growth tends to plateau and decline; the addition of new games and increased promotion are therefore essential for continued growth. The need to maintain or even boost revenues has led state lotteries to adopt business strategies that are at cross-purposes with the general public interest, promoting gambling and encouraging consumption.
While making decisions and determining fates by casting lots has a long history (including several instances in the Bible), the modern lottery is relatively new, gaining broad acceptance in the United States only after the 1970s. In fact, many states did not begin their lotteries until after this period. Despite the popular perception that the lottery provides a needed source of revenue for education, the facts demonstrate that the lion’s share of state lotteries’ proceeds are devoted to administrative and vendor expenses, with only a small fraction going to educational programs.