A competition based on chance, in which numbered tickets are sold and prizes (often cash) are awarded to the holders of numbers drawn at random. Some states and municipalities also run lotteries to raise money for public causes, such as education.

The first lottery-like activities were documented in the Low Countries in the 15th century, but their roots may be even older. Town records from Ghent, Utrecht, and Bruges mention public lotteries to raise money for walls and town fortifications, and for the poor.

In the US, state governments legalize lotteries to boost revenue and to provide a way for citizens to gamble for public goods. Many people, including some who would not normally be interested in gambling, choose to participate in the lottery and often spend large sums. Some critics see lotteries as addictive and unfair, but others point to their ability to improve the quality of public services.

State lotteries typically have a monopoly on their operation, and they are legally required to give a substantial portion of ticket sales proceeds to the state government, which then uses that money for various purposes. As a result, lottery revenues are not as transparent as a normal tax. Consumers do not understand that they are paying a hidden tax when they buy lottery tickets, and some people feel that lotteries are not worth the taxes they generate.

Lottery games typically start out with a modest number of relatively simple games, and then grow quickly through innovations such as instant games and video poker, and by promoting them aggressively. The growth in revenue then slows, and, under pressure to maintain or increase revenues, the lottery tries to keep consumers interested by introducing new games.