Lottery is the practice of distributing prizes or goods by chance. It can take many forms, from a simple drawing of numbers for a cash prize to a contest for units in a subsidized housing block or kindergarten placements at a reputable public school. In most countries, state-regulated lotteries distribute a fixed percentage of total ticket sales as prizes.

Most lottery players know that the chances of winning are slim, but they also feel a certain meritocratic belief that someone has to win at some point, and their own ticket might be the one. This is the ugly underbelly of state-sponsored gambling, an effort to make money that is driven by public policy goals and at cross-purposes with the broader interests of society.

Generally, states legislate a monopoly for themselves by creating a lottery agency or public corporation; establish the number of prizes and their values (with the actual value often determined by a commission or other profit-taking); begin operations with a limited number of relatively simple games; and gradually increase the variety offered. The resulting mix of games reflects both the preferences of the players and the competitive environment in which the lottery operates.

As the industry evolves, debate and criticism usually shift away from the general desirability of a lottery to specific features of its operation. These include the alleged negative impacts on poor people and compulsive gamblers, and the question of whether a state should be in the business of running a lottery.