Lottery is a form of gambling in which participants have a chance to win prizes based on the drawing of lots. Prize money can be cash or goods, such as a car or vacation. People play lottery games for entertainment, and some hope that their ticket purchases will improve their lives. The practice is controversial, especially since it contributes to poverty. The casting of lots for making decisions and determining fates has a long history, but the modern lottery originated in colonial-era America to raise funds for projects such as paving streets or building churches.

Lotteries are government-run; they are not privately operated, though private companies sell tickets and provide other services for a fee. Generally, state governments legislate the lottery, set up a public corporation to run it, and begin operations with a modest number of relatively simple games. As demand grows, the lottery progressively expands its offerings to increase the range of available games and to attract new players.

The majority of lottery revenue outside winnings goes back to participating states, which have complete control over how they use the money. Most put a large percentage into a general fund, which can be used to address budget shortfalls in areas such as roadwork, police force, or social programs. Other states have developed more specific ways to use their lottery funds, such as funding support centers for compulsive gamblers or establishing college scholarship programs.

Lottery critics contend that the industry promotes a false sense of civic duty. They argue that by buying a lottery ticket, people believe they are doing their part to help the state and its children. But this argument fails to consider that lottery money is a small drop in the bucket of state revenues, and the overall contribution of gambling to state finances is much smaller than that of taxation from other sources.