A lottery is an arrangement in which prizes are allocated by a process that relies on chance. Prizes can be money, property or services. Some examples of this arrangement are: the drawing of lots in a game of chance, an examination administered by an institution to select candidates for admission or advancement, commercial promotions involving the random selection of customers or recipients of goods and services, and the determination of jury members.

Lotteries are popular and widespread in America, where more than half of all Americans buy a ticket at least once each year. The majority of those tickets are purchased by people in the upper-middle and higher incomes. However, a substantial proportion of those who play the lottery are in lower-income groups. They tend to be less educated and nonwhite. These people are the main source of lottery revenues, and they are disproportionately represented among the top 20 to 30 percent of players.

Many state governments have legalized lotteries, with proceeds helping to finance public projects such as roads and bridges, schools and hospitals, and other amenities. The lottery industry is highly regulated, and most states have created a separate lottery division to manage the operation. These departments select and license retailers, train employees to sell and redeem lottery tickets, assist retailers in promoting lottery games, and pay high-tier prizes. They also monitor compliance with state lottery laws.

The history of lotteries is a long one. They can be traced back to ancient times, including a biblical reference to dividing land by lot and the ancient Roman practice of giving away slaves by lot during Saturnalian feasts. Lotteries were also widely used in colonial America to fund both private and public ventures, such as paving streets and building churches. George Washington sponsored a lottery in 1747 to raise funds for the construction of roads and canals, while Benjamin Franklin held a lottery in Philadelphia in May 1757 to raise money for cannons to defend the city against the British invasion during the French and Indian War.

Today, lottery revenues typically represent a small percentage of state budgets, but they continue to grow at a rapid pace and are increasingly influential in the political arena. Moreover, the growing number of private gaming companies has increased competition and shifted market power to operators who can offer lower price points for the same level of service.

A fundamental problem with state lotteries is the lack of a comprehensive public policy for gambling. In most cases, lottery decisions are made by piecemeal and incremental measures, largely driven by the needs of individual state agencies. Authority for lottery policies is often divided between legislative and executive branches, with pressures from various interest groups resulting in a patchwork of policies that lack a broad overview.