Lottery is a game in which the participants play for a prize and the winnings are determined by chance. Prizes may be cash or goods. Some state governments have established lotteries to raise funds for specific public purposes such as paving streets or building schools. Others use them to provide a source of entertainment for the general population. Many people find the lottery an appealing form of gambling, because it is relatively inexpensive and involves little skill. Some studies suggest that people may also enjoy the psychological thrill of participating in a lottery and believing they have a chance to win.
Since New Hampshire launched the modern era of state lotteries in 1964, most states have adopted them. In general, the state legislates a monopoly for itself; establishes a public agency or corporation to run the lottery (as opposed to licensing a private company in return for a share of revenue); begins operations with a modest number of relatively simple games; and, due to pressure to increase revenues, progressively expands its games and the complexity of its operations.
When state governments face budget shortfalls, they can either cut spending or increase revenue. Cutting spending is a political impossibility, so most state governments turn to raising so-called sin taxes on tobacco, alcohol, and gambling. Because lottery revenue is not a direct tax on state residents, it is a more politically acceptable source of funding than increasing sales or income taxes. Consequently, it is a vital ingredient in most state budgets and generates significant publicity for the state that sponsors the lottery.