A lottery is an arrangement by which prizes are allocated in a process that depends wholly on chance. Once established, the operation of lotteries is often subject to a range of criticisms, including concerns about compulsive gambling and its regressive effect on lower-income groups. These concerns typically change the focus of discussions about the desirability of a lottery and are a driving force in the continuing evolution of the industry.

Lottery revenues expand rapidly at first but eventually level off and may even decline. This creates a need to introduce new games to maintain or increase revenues. These innovations usually involve reducing the prize amounts while increasing the likelihood of winning. Examples include the introduction of scratch-off tickets and instant games.

Traditionally, people purchase a ticket and then hope that the numbers on the ticket will match those randomly drawn by a machine or a human. The prize money is then awarded if the ticket matches a winning combination of numbers. Some state governments operate their own lotteries, while others contract with private companies to run them. Most state lotteries are government monopolies that prohibit competition from other commercial operators.

In colonial America, lotteries were frequently used to raise funds for a variety of purposes, including the construction of public works projects. Benjamin Franklin organized a lottery to raise money for cannons to defend Philadelphia and George Washington sponsored one to build a road over the Blue Ridge Mountains, although it was unsuccessful.