A lottery is a type of gambling in which participants pay a small amount for the chance to win a larger sum. The prize money is awarded by a random drawing of tickets or numbers. Modern examples include a contest for units in a subsidized housing block or kindergarten placements.

Lotteries have a long history, both in states and in the private sector. They have been used to raise funds for both public and private projects, such as building colleges, canals, roads, and churches. In colonial-era America, a number of public lotteries were established as means of raising “voluntary taxes” to support local governments and help finance the American Revolution. In addition, privately organized lotteries were common, including one that Benjamin Franklin used to try to raise funds for cannons to defend Philadelphia against the British.

In Europe, the first lotteries to offer tickets with prizes in the form of money appear in 15th-century Burgundy and Flanders, where towns raised money for town fortifications or to aid the poor. The first European public lottery to award money prizes was probably the ventura, held from 1476 at Modena under the patronage of the ruling d’Este family. Francis I of France authorized lotteries in several cities from 1520 to 1539.

A key element in the success of state lotteries is their ability to convince people that they are contributing to a specific public good. This argument is particularly effective in times of financial stress, when states can point to the popularity of the lottery as an alternative to tax increases or cuts in public programs. But the success of this strategy is based on a fallacy. As Clotfelter and Cook have shown, the relative popularity of state lotteries does not correlate with their objective fiscal health, or even with their overall levels of revenue.