A lottery is a game of chance or process in which winners are selected by a random drawing. Lotteries are often administered by state governments. They may also be used to decide other types of decisions, such as sports team drafts and the allocation of scarce medical treatment.
In the United States, lotteries are government-operated monopolies that sell tickets to the general public. Proceeds are used to fund state programs, including education. In 2004, forty-two states and the District of Columbia operated lotteries. Tickets are sold through a variety of outlets, such as convenience stores and gas stations, restaurants and bars, nonprofit organizations, bowling alleys, and newsstands. The NASPL Web site reports that as of 2003, nearly 186,000 retailers sold lottery tickets.
While lottery advertising stresses the potential for large jackpots, it also emphasizes the low probability of winning. Critics argue that lottery advertisements present misleading information about the odds of winning and the value of a prize (lottery prizes are paid in annual installments over 20 years, which can be offset by taxes and inflation). They also contend that lotteries target specific constituencies, such as convenience store operators, which benefit from heavy lottery sales; suppliers, who contribute heavily to state political campaigns; teachers, for whom lottery revenues are earmarked; and legislators, for whom lotteries help generate additional revenue.
Historically, the prizes offered by lotteries have been merchandise items of unequal value. The first European lotteries were essentially giveaways, distributed to dinner guests at the court of the Roman Emperor Augustus as an entertaining distraction during Saturnalian revelries. Later, the Romans used lotteries to raise funds for repairs and to distribute luxury goods, such as vases, to their citizens.
Modern lottery games typically involve selecting a group of numbers from a set and then determining how many of those numbers match a second set chosen by a random drawing. The number of matching numbers determines the prize won. Some prizes are awarded for matching just three or four of the numbers. Others are awarded for matching five of the numbers.
Lottery commissions try to counter critics by stressing that playing the lottery is fun and promoting new games, such as video poker and keno. These games, however, have prompted concerns that they target poorer individuals and increase opportunities for problem gambling.
The purchase of lottery tickets can be explained by decision models based on expected value maximization. If the ticket costs more than the expected prize, an individual maximizing expected utility should not buy a lottery ticket. Nonetheless, the purchase of lottery tickets can be explained by other factors as well, such as risk-seeking behavior and the desire to experience a thrill. Moreover, the increased exposure to gambling ads on television and in the media have also influenced consumer behavior.