A competition based on chance, in which numbered tickets are sold and prizes given to the holders of numbers drawn at random; often used as a means of raising money for the state or a charity. A gambling game in which the prize is a sum of money or goods.

During the 1500s, Francis I of France introduced lotteries in several cities for public and private profit; and in the 18th century, Benjamin Franklin sponsored a lottery to raise funds for cannons to defend Philadelphia during the American Revolution.

Today, state lotteries are an important source of public revenue. They are also very popular with the general public, and in many cases they provide an opportunity to win a large sum of money. The majority of these funds are spent on education, public works projects and health-related initiatives. Some states have even used the proceeds to fund religious and charitable activities. In the United States, there are currently 37 state lotteries, along with a federally run lottery.

The modern era of state lotteries began in 1964 when New Hampshire established its first. Inspired by the success of this experiment, New York followed suit in 1966 and has been joined by a number of other states. The structure and operation of these lotteries varies slightly from one state to the next, but they generally follow similar patterns. The state legislates a monopoly for itself; establishes a public agency or corporation to run it (as opposed to licensing a private firm for a fee); begins operations with a modest number of relatively simple games; and then, due to pressure to increase revenues, progressively expands the size and complexity of its offerings.

A significant issue that continues to plague state lotteries is their relative dependence on the general public. Many lottery officials become dependent on the revenue streams from ticket sales, and this can lead to a lack of overall oversight. In addition, public policy decisions are made piecemeal and incrementally, with the result that lottery officials often have a very limited sense of their overall mission.

When a winner is selected in a lottery, the prize money can be paid out either as a lump sum or as an annuity. Lump sum payments are a form of immediate cash, while annuity payments are made in a series of regular payments over time. Which option is best for the winner depends on personal financial goals and applicable laws and regulations.

Another major issue that has emerged is the question of whether lottery winners are disproportionately from low-income areas. While it is impossible to prove this conclusively, evidence suggests that the bulk of lottery players and revenues come from middle-class neighborhoods. This has led critics to allege that the lottery is a form of redistribution that benefits the rich at the expense of the poor. In addition, lottery advertising is frequently criticized for providing misleading information about odds and the likelihood of winning.