Lottery is a game of chance in which participants pay a small amount for the opportunity to win a large sum of money. It is a type of gambling, but it is often run by the state or federal government rather than private companies. The prizes are awarded through a random drawing. The first recorded lotteries were held in the Low Countries in the 15th century for purposes such as building town fortifications and helping the poor.
Most people who play the lottery know that the odds of winning are very long, and they are likely to lose more than they win. However, for some individuals the entertainment value or other non-monetary benefit of playing the lottery may outweigh the disutility of a monetary loss. As such, a ticket purchase can be a rational decision.
State governments that operate lotteries face the challenge of balancing their financial goals with the societal impacts of their activities. In an anti-tax era, it is difficult for the state to refuse an inflow of relatively painless revenues. As a result, the development of lottery policies tends to be piecemeal and incremental, with the authority to decide on policy being divided between the legislative and executive branches.
Moreover, as lotteries are public institutions, they tend to develop specific constituencies: convenience store operators (who receive large commissions on tickets); suppliers of goods and services (whose lobbying for state political support is routinely reported); teachers (in states in which lottery revenues are earmarked for education), etc. These interests have their own lobbying needs, and the competition for revenue can lead to state policy that is at cross-purposes with the overall public interest.