A gambling game or method of raising money, especially for a charitable purpose, in which numbered tickets are sold and prizes allocated by drawing lots. The term is probably derived from Middle Dutch loterie, a calque on French loterie, itself a calque on Middle Low German lote (literally ‘lot’). The casting of lots for decisions and the allocation of fates has a long history in human society, although public lotteries to distribute prizes for financial gain are relatively recent. The first recorded public lotteries to award cash prizes were held in the cities of the Low Countries in the 15th century, for such purposes as town repairs and to help the poor.

Lottery games dangle the promise of wealth to the masses, using billboards and other marketing strategies to attract players from all walks of life. The player base is disproportionately lower-income, less educated, and nonwhite, and lottery play decreases with age. The vast majority of lottery games are scratch tickets, which can be bought for as little as $1. Unlike most other games, winnings may be received in one lump sum or in a series of payments over time, called an annuity. Choosing the latter option, which allows for investment and compounding, usually results in a larger amount than the advertised prize.

State governments adopt lotteries in part because they are a painless source of revenue. While the lion’s share of proceeds goes to prizes, administrators must also pay out commissions to retailers, as well as cover advertising costs and salaries for lottery officials. In some states, a smaller percentage of funds is earmarked for education.