Lottery is a form of gambling in which prizes are allocated by a process that relies entirely on chance. State governments have adopted lottery systems to raise revenue and earmark the proceeds for specific purposes, such as education. Although they are a significant source of government funds, lottery revenues do not elicit the same degree of public debate and criticism as do normal taxes because consumers are generally unaware of the implicit tax rate on their tickets.

Although casting lots to make decisions or determine fates has a long record in human history, the use of lotteries to distribute money is of more recent origin. The first recorded lotteries were public lottery games in the Low Countries in the 15th century, organized to raise funds for town fortifications and to help poor people.

In the modern era, state lotteries are a major source of state and local government revenue. Their growth has led to widespread public acceptance and, despite criticisms of compulsive gambling and their regressive effects on lower-income groups, they continue to draw large numbers of players.

The basic structure of a lotteries consists of a pool of money in which all entries are placed, with a percentage normally going as costs and profits to the organization, sponsor, or state. The remainder is available for prize winners. The size of the pool depends on a balance of several factors: how many large prizes are offered, how frequently they are awarded, and whether the majority of prize money comes from a few large jackpots or from a series of smaller amounts.