An arrangement whereby one or more prizes are allocated to people who participate in a competition that relies entirely on chance. The term lottery may also be used to refer to an arrangement in which numbered tickets are sold to the participants in return for a fee; or, more generally, to any competition based on the distribution of wealth or goods.
The casting of lots for decisions and the determination of fates has a long record in human history, but lotteries were established to distribute prize money as an alternative to taxation. The state governments that first established lotteries saw them as a way of expanding their array of services without imposing particularly onerous taxes on the middle and working classes. This view was based on the belief that the public would willingly spend their money in order to improve their chances of winning, and thus help the state pay for more of its social safety net services.
Many state lotteries are run as for-profit businesses, and they must attract a large enough audience to make a profit. This necessarily involves a certain amount of advertising, which typically focuses on promoting the size of the jackpots. The result is that the ad campaigns often appear to exaggerate the probability of winning, thereby convincing potential players that they have a realistic chance of becoming rich. Some observers suggest that these advertisements contribute to growing economic inequality by dangling the promise of instant riches in an era of widening income disparities and newfound materialism.
Lottery revenues have grown dramatically since the first modern state lottery began operation in 1964. This growth has prompted a rapid expansion into new games, such as video poker and keno, and a greater effort to promote them through mass media. Some states earmark some of the proceeds for education, while others use them to balance their budgets or as a source of other forms of revenue. Regardless of the specific uses of lottery funds, critics point out that the public is not getting the value for its dollars that it should from this arrangement.
A key issue with lottery funding is the fact that the proceeds are not derived from a general tax on all citizens, but rather from a relatively small subset of citizens who choose to purchase lottery tickets. This creates an incentive for lottery officials to maximize ticket sales, and it is common for them to target convenience stores and other retailers who are known to sell the most tickets. This dynamic has also made it difficult for state legislators to rein in lottery spending and pressures for increased revenues are constant. Consequently, very few, if any, states have developed a coherent lottery policy. As a result, the evolution of lottery operations takes place piecemeal with little overall direction from either legislative or executive authorities. The result is that lottery officials inherit policies and dependencies on revenues they can neither control nor manage.