A lottery is a game in which tickets are sold and a drawing takes place to determine the winner. It is a form of gambling, and one that is largely illegal in many countries. The term derives from the Latin loterie, which means “drawing lots” or “dividend,” and it may refer to:
The earliest known lotteries, in which people could win money or goods, were held in the Low Countries in the fourteen-hundreds. They were used to raise funds for town fortifications and to provide charity for the poor.
Eventually the practice spread to England, where it became common during the early seventeenth century, in spite of Protestant prohibitions against gambling and even dice-playing. The first English state-run lottery was launched in 1569, and advertisements promoting it began to appear two years earlier.
Lotteries became a popular pastime in Europe as well as America, although they were banned in some colonies because of religious objections to gambling. The British colony of Massachusetts, for example, had an official law against it. Yet a number of private lotteries were operated there in the eighteenth and nineteenth centuries, despite the legal ban.
In the US, the federal government runs a national lottery. There are also state lotteries, which are usually run by private companies that sell tickets on behalf of the government. These lotteries raise funds for a variety of public purposes, including education, medical research, and highway construction. The prizes are often cash or merchandise, though some are services such as vacations and sports tickets. In the past, states have also offered military service prizes and other noncash awards.
The popularity of lotteries is rooted in ancient human curiosity about chance and fate. The practice is evident throughout the Bible, and in Roman history—Nero was a big fan—where the casting of lots was used for everything from giving away property to divining the Lord’s will after the Crucifixion.
Modern lottery games are based on the same basic principles as their ancient counterparts. Tickets are sold to the public, with a fixed prize pool set in advance and the odds of winning a given prize determined by mathematics. Purchasing a ticket can be explained by decision models that account for risk-seeking and loss aversion, as well as by more general utility functions defined on things other than lottery outcomes.
Advocates of the lottery once argued that it would float state budgets, relieving politicians from having to think about raising taxes. This argument had its limits, however. As Cohen notes, it led to state lotteries being marketed as “budgetary miracles, the chance for states to make revenue appear seemingly out of thin air.” As states sought solutions to budget crises that did not enrage their tax-averse electorates, advocates narrowed their appeals by arguing that a lottery would fund a single line item, typically a government service that was popular and nonpartisan—usually education but sometimes elder care or public parks. These tactics proved effective, and the lottery became a popular way for states to finance their operations.