A game of chance in which tokens are distributed or sold and prizes are given to those whose numbers are drawn by lot; often sponsored by state agencies or organizations as a way of raising money. Also called lottery, lotto, or keno.

People in the United States spent upward of $100 billion on lottery tickets in 2021, making it the most popular form of gambling in the country. Its popularity obscures its regressive economic effects and the harm it can cause the poor, problem gamblers, and families of those who play it. Moreover, it serves to mask the fact that it is a state-sponsored activity and that it runs at cross-purposes with the broader public interest.

When state governments first instituted lotteries, they did so as a way to raise revenue without imposing especially onerous taxes on the middle and working classes. The hope was that lottery revenues could help fund a broad array of state programs while leaving the state with more to spend on things like education and health care. But that arrangement may have run its course. Increasingly, lottery revenues appear to be a substitute for general-purpose taxation rather than an alternative to it.

While the majority of lottery players are white and affluent, the percentage of those who play is growing rapidly among blacks and Hispanics. This is largely due to the rapid expansion of games such as daily numbers and scratch-off tickets that offer lower odds but still provide substantial winnings. These games have pushed the overall average prize amount to about $50 per ticket, up from about $25 in the early 1970s.

The vast majority of the money from lottery ticket sales goes to pay prizes, with only a small percentage going to administrative costs and profit for the sponsor, such as the state or charity. This leaves a large pool of money for the winners, who choose whether to select a few large prizes or many smaller ones. The choice of a few large prizes or many smaller ones is influenced by the risk/reward trade-offs. Larger prizes require higher ticket sales, but they also carry much greater risk of dissatisfaction and withdrawal, while smaller prizes are less expensive to produce but have lower likelihood of winning.

Lottery games are designed to give bettors a sense of control over their fate, an illusion of choice that can provide a measure of psychological and emotional relief for people who live in difficult circumstances. They do not, however, provide value for the money they cost. The vast majority of lottery players simply get value for the couple of minutes, hours, or days they get to dream and imagine that they will be the one who wins big.

The history of state lotteries demonstrates the difficulty of developing coherent public policies on an issue like this. In the case of lottery policy, decisions are made piecemeal and incrementally, with little or no unified vision to guide them. As a result, state officials are left with an industry that is changing rapidly, and they must constantly make choices about how to adjust its rules and marketing strategies in order to keep up.