What is a Lottery?
Lottery (lot’er*y) is a gambling game or method of raising money, as for some public charitable purpose, in which tickets bearing various numbers are sold and the winners are determined by chance. The practice of distributing prizes by the casting of lots has a long record in human history, although using it for material gain is more recent. The first recorded public lottery, for municipal repairs, was conducted during the Roman Empire; later lotteries were used for a variety of other purposes in the English colonies.
Lotteries are extremely popular with the general population, and they develop a number of specific constituencies, such as convenience store operators (the usual distributors); suppliers (whose heavy contributions to state political campaigns are reported); teachers (in states where lottery revenues are earmarked for education); state legislators (who quickly become accustomed to the additional revenue); etc. Since New Hampshire initiated the modern era of state lotteries in 1964, no state has abolished its own lottery.
The most basic requirements for a lottery are that there must be some way to identify each bettor and the amount of money staked, and that there be a pool of prizes for which winners are selected. Costs of organizing and promoting the lottery, profits for the promoter, and taxes or other revenues normally are deducted from this pool, leaving the prize amounts. The size of these prize amounts may be determined in advance or depend on the total number of tickets purchased. Winners normally can choose to receive their winnings in the form of a lump sum or annuity payments. Annuity payments tend to be smaller than the advertised prize amounts, because of the time value of money and income tax withholdings.