Lottery is a system in which prizes (such as money, goods, or services) are allocated by means of an arrangement that relies entirely on chance. The arrangement may involve payment of a consideration (such as money or property), though the strict definition of lottery requires that the consideration be paid for a chance to receive a prize. This type of arrangement is commonly a form of gambling and is regulated by state laws. Other examples of this sort of arrangement include military conscription, commercial promotions in which prizes are given away by chance, and the selection of jury members.
Each state establishes a separate lottery commission or agency to run its lottery, and enacts laws governing the operation of the lottery. The commission or agency is responsible for selecting and training retailers, promoting lottery games, paying high-tier prizes, and ensuring that all retailers and players comply with the law.
State lotteries usually start with a small number of simple games and then, in order to increase revenue, progressively add new games. Eventually, revenues reach a peak and begin to decline. The state is then faced with a dilemma: it must either maintain or decrease the size of its games or reduce the amount of prizes.
Critics argue that regardless of their effect on state revenues, lotteries essentially promote addictive gambling behavior and raise money in support of illegal activities. They are also criticized as a major regressive tax on low-income groups.