Lottery, as the term is commonly used in the United States, refers to any arrangement in which a prize or other reward is assigned to one or more participants on the basis of chance. The prize can be money, goods, services, or real estate. Typically, the organizers must establish certain rules and regulations to govern the operation of a lottery. This includes defining the frequencies and sizes of the prizes, as well as the costs involved in organizing and promoting the lottery. In addition, a percentage of the pool must be deducted as administrative expenses and profits for the lottery organization or sponsor. The remainder must be set aside as the prizes for the winners. The prize sizes must be carefully weighed in order to avoid over-enriching the richest winners and to ensure that the majority of participants receive a fair chance of winning.
Historically, state lotteries have been popular sources of public revenue. The chief argument for their adoption has been that they provide a “painless” source of revenue: Rather than taxing the general population, which would generate resentment and resistance, the lottery draws its revenues from players who choose to participate in the game. Once established, the lottery becomes a major source of funding for many public uses.
As the lottery has become more widespread, debates and criticism have moved away from the general desirability of it to specific features of its operations: the likelihood of winning, the potential for addiction, and its alleged regressive impact on low-income groups. Despite these issues, it remains difficult to find any state in which the lottery has been abolished.
The first European public lotteries appeared in the 1500s, when towns sought to raise funds for defense, charity, or other purposes. By the 17th century, Francis I of France allowed lotteries to be established for private and public profit, and they were widely embraced by his subjects. Louis XIV, however, was suspicious of the public nature of these arrangements and returned many of the prizes to be redistributed. The popularity of the French lotteries waned, and they were finally abolished in 1836.
A modern public lotteries typically operates in a similar way to the older privately run ones: It establishes a government agency or corporation to organize and conduct the games; begins operations with a modest number of relatively simple games; and, under pressure for additional revenues, progressively expands its portfolio of offerings. The result is a complex system of games that, while providing entertainment and generating significant public revenue, have also come to expose players to the risk of addictive gambling.
A key to the success of a lottery is its ability to develop and sustain broad-based support. This support includes convenience store operators (who usually serve as the primary vendors); lottery suppliers; teachers (in states where lottery proceeds are earmarked for education); and, in many cases, state legislators (who quickly get accustomed to receiving extra funds from lotteries). The lottery can also attract special constituencies, such as veterans groups.