What is a Lottery?

A lottery is a game of chance in which tickets are sold and numbers drawn at random for prizes. The prize money can range from a small sum to the entire value of the assets in the prize pool. The lottery may be run by a public or private entity. The word comes from the Dutch noun lot, meaning “fate.” People buy lottery tickets with the hope of winning a large sum of money. Although the odds of winning are low, lottery games generate billions in revenue each year in the United States.

The modern state-run lottery was developed in the immediate post-World War II period when states were looking to expand their social safety nets without particularly onerous taxes on middle class and working class residents. States envisioned lotteries as a means of funding everything from highways to schools, and many hoped that the popularity of the games would help them get rid of taxes altogether.

As it became clear that state governments did not find the lottery a silver bullet to eliminate taxation, advocates began to gin up other strategies for its promotion and operation. They shifted the lottery’s selling point from the idea that it would float most of a state budget to the notion that it could pay for a particular line item. Then they changed the message again, arguing that a lottery was an easy way for a state to raise billions without arousing the same political opposition that has thwarted so many other attempts at reform.

Today, 44 states and the District of Columbia run a lottery; Alabama, Alaska, Hawaii, Mississippi, Utah, and Nevada do not. The reasons for these exceptions are varied: Alabama and Utah cite religious concerns; Mississippi, Hawaii, and Nevada do not allow gambling; and Alaska, with its oil revenues, does not feel the fiscal urgency that might drive other states to adopt the lottery.

Those states that do run a lottery often spend substantial amounts on advertising and promotion, but they also make large concessions to the interests of specific constituencies. These include convenience store operators (who often sell tickets); suppliers of lottery equipment and supplies (heavy contributions to state political campaigns by these companies are regularly reported); teachers (in those states that earmark lottery revenues for education); and politicians, whose electoral support is crucial for the success of the lottery.

In addition to these special interests, there is a general sense that the lottery represents an opportunity to win something that is not readily available. As such, the expected utility for an individual who plays a lottery can be very high if it includes a combination of entertainment and other non-monetary benefits. If this is the case, a person’s purchase of a ticket may be a rational choice. However, if the expected utility is not high enough, the purchase of a lottery ticket will not be a rational choice. In this case, the cost of a lottery ticket is not a good bargain for the purchaser.