The lottery is a form of gambling wherein prizes are allocated to one or more winners by an arrangement that relies entirely on chance. A prize may be a cash sum or goods and services. The term lottery derives from the drawing of lots to determine ownership or other rights, a practice that is recorded in many ancient documents, including the Bible. The first modern state-sponsored lotteries began in the Low Countries in the fifteenth and sixteenth centuries for the purpose of raising money for towns, wars, colleges, and public works projects.

In the United States, state governments grant themselves a monopoly over the operation of a lottery and use the proceeds to fund government programs. As of August 2004 state-sponsored lotteries operate in forty-two states and the District of Columbia. The majority of lottery tickets are sold by private retailers, such as convenience stores, supermarkets, drugstores, service stations, nonprofit organizations (churches and fraternal organizations), restaurants and bars, bowling alleys, and newsstands. Retailers sell the tickets in exchange for a percentage of the profits, which are used to pay the prize pool, advertising, and costs.

State-sponsored lotteries have become a fixture in American life. People spend over $100 billion on tickets each year, making them the most popular form of gambling in the country. States promote their lotteries as a source of revenue that helps provide a social safety net and avoid the imposition of unpopular taxes. While lottery revenues do help reduce the burden on taxpayers, critics point to a host of other concerns, including the impact on compulsive gamblers and alleged regressive effects on lower-income groups.