What Is a Lottery?

Lottery refers to a game of chance in which participants have the opportunity to win a prize. It is a form of gambling that is usually regulated by state law and is designed to raise money for public benefit. The prize money is determined by a draw of numbers or other symbols. The odds of winning vary according to the number of tickets sold, the method used to select the winners, and the size of the prizes.

The most basic requirement of a lottery is that there must be some way to record the identity of bettors and the amounts staked by each. This may be done by having the bettor write his name on a ticket that is deposited with the lottery organization for shuffling and selection in the drawing. Many modern lotteries use a computerized system to record these data.

Retailers are paid a commission on the amount of money they take in from ticket sales. In addition, most states have incentive-based programs in which retailers receive additional compensation if they meet certain sales criteria. These programs tend to be more effective than increasing retailer commissions at promoting ticket sales.

In the United States, state governments control and operate lotteries. They also allocate their profits to different beneficiaries, as shown in Figure 7.2. The profits of state lotteries are large, and the total allocation in FY 2006 was $17.1 billion. The largest single share of the proceeds went to education, with New York spending $30 billion. The remainder was divided among other public benefits, including health and human services, transportation, and housing.