What is a Lottery?


A lottery is a competition based on chance in which numbered tickets are sold and prizes are awarded according to a random drawing. Usually, money is the prize, but in some cases goods or services are offered as prizes, too. A lottery can be run by a private organization or a government. Most lotteries are financial, but there are also some socially responsible lotteries that raise funds for things like education, public works projects, and wars. Some critics of financial lotteries say that they encourage addictive gambling habits, but others point to the fact that lottery players as a group contribute billions in lottery receipts that could be used for retirement or college tuition savings.

In the United States, all state governments operate lotteries, and most have exclusive rights to do so. In the early 1990s, six additional states began lotteries (Colorado, Idaho, Kansas, Minnesota, Montana, Oregon, and Washington), bringing the total number of state lotteries to forty-two. Many other countries have national and international lotteries.

Despite criticism of lottery games for encouraging addictive gambling, the majority of Americans are supportive of state-run lotteries. In 1999, a Gallup poll found that 75 percent of Americans approved of the use of state lotteries to provide public funds for a variety of purposes.

Proponents of state-run lotteries argue that they allow the government to increase its revenues without imposing onerous taxes on working families, businesses, and individuals. They also cite studies showing that lotteries help to generate funds for social services and other important government projects. Lotteries also offer profits for the small retailers that sell tickets and larger companies that participate in merchandising campaigns and provide advertising or computer services.

While some opponents of lotteries point to studies that show regressivity, most supporters use economic arguments in favor of their position. They note that many working-class people play the lottery, and that these players as a group contribute significantly to state revenues. They also argue that the government could not afford to meet the needs of the middle class and working classes without the revenues generated by lotteries.

Retailers who sell state-run lotteries are compensated primarily through a commission on ticket sales. Many of them also have incentive-based programs that pay them bonuses if they meet certain sales goals. Lottery officials also provide retailers with demographic information about potential customers. This allows them to better tailor merchandising and marketing campaigns. In addition, lottery retailers can receive special discounts on merchandising materials provided by the state.