A lottery is a method for distributing something (usually money or prizes) among a group of people by chance. The term is generally used for state-sponsored games in which people purchase chances for a prize by paying a fee or tax, and the winners are selected by drawing lots.
Lotteries first appeared in Europe in the 15th century, with cities in Burgundy and Flanders trying to raise funds for defense or poor relief. The first English state lottery was in 1569, and by the end of the decade a national system had evolved, with a variety of different kinds of drawings being used. Currently, most American states run state-sponsored lotteries.
The basic features of a lottery are a set of rules, the pooling of ticket purchases, and the distribution of prizes based on the outcome of the draw. Normally, a portion of the total sales goes to cover costs and profits, and the remainder is available for prizes. Ticket prices vary with the number of available prizes, with more prizes resulting in higher ticket prices. Lotteries typically start out with dramatic revenues, which then level off and may even decline. To keep up the public interest, new games are introduced to attract potential bettors and maintain or increase revenues.
One of the biggest challenges facing lottery officials is the question of whether promoting gambling—especially for high-ticket prizes—is an appropriate function for state government. Especially when the government is the official promoter, concerns about compulsive gamblers and the regressive impact on lower income groups often surface.